The National Association of Realtors said Thursday that sales of previously occupied homes dropped 1.5 per cent in May from the previous month to a seasonally adjusted annual rate of 4.55 million.
Sales have risen 9.6 per cent from a year ago, evidence that home sales are slowly improving. Still, the pace has fallen since nearly touching a two-year high in April and remains well below the 6 million that economists consider healthy.
The monthly decline follows a report that employers added the fewest jobs in May in a year. Weaker hiring has slowed the broader economy and could lead some to reconsider buying a home, even with record-low mortgage rates available to those who can qualify.
"Not a surprise that existing home sales took a step back in May," said Jennifer Lee, a senior economist at BMO Capital Markets. Lee noted that the level of home sales is still "decent." But she said "softening job growth could slow the housing recovery."
First-time buyers, who are critical to a recovery, made up just 34 per cent of sales in May. That's down slightly from 35 per cent in April. In healthy market, the number is more than 40 per cent.
One positive sign: The supply of homes for sale remains low. The inventory of unsold home in May was just 2.49 million, roughly the same level as April. It would take little more than six months to exhaust the supply at the current sales pace, a ratio last seen in 2006 when the housing market was booming.
A low supply typically encourages more people to put homes up for sale. That generally improves the overall quality of the homes on the market, which drives prices higher.
The median price for a home sold in May was $182,600, up 5.1 per cent from $173,700 in April. It was the highest median price since June 2010 — when sales benefited from a federal home-buying tax credit.
Home sales neared a two-year high in April, adding to other signs of modest improvement in the industry nearly five years after the housing bubble burst.
Builders are more confident and are starting to build more homes. The government reported Tuesday that builders started work on more single-family homes in May and requested the most permits to build homes and apartments in three and a half years.
Home sales rose 1 per cent in the Midwest, the only region to show an increase. Sales fell 4.8 per cent in the Northeast, 3.4 per cent in the West and 0.6 per cent in the South.