Sales of existing homes in the United States fell by 0.3 percent in May, leading to the lowest level in 4 years, the National Association of Realtors (MRC) reported on Monday.

The 0.3 percent fall left existing home sales to a seasonally adjusted annual rate of 5.99 million units last month from a level of 6.01 million in April. Sales were 10.3 percent lower than a 6. 68 million-unit pace in May 2006.

Lawrence Yun, NAR senior economist, said he was not surprised at the decline.

"I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers," he said.

"The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices. It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market," he added.

The national median existing-home price for all housing types was 223,700 dollars in May, which is 2.1 percent below May 2006 when the median was 228,500 dollars.

The median is a typical market price where half of the homes sold for more and half sold for less, but there is a temporary downward distortion in the current national comparison because sales have shifted away from many high-cost markets in the past year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.26 percent in May, up from 6.18 percent in April. The rate was 6.60 percent in May 2006.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said higher inventories are helping to offset an affordability impact from higher mortgage interest rates.

"Although mortgage interest rates are trending up, they are historically favorable," she said. "The good news is buyers have more negotiating power with a fairly large supply of homes available in much of the country."

Total housing inventory rose 5.0 percent at the end of May to 4. 43 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.4-month supply in April.

Single-family home sales slipped 0.8 percent to a seasonally adjusted annual rate of 5.20 million in May from an upwardly revised 5.24 million in April, and are 10.8 percent lower than a 5. 83 million-unit pace a year ago. The median existing single-family home price was 223,000 dollars in May, which is 2.4 percent lower than May 2006.

Existing condominium and co-op sales rose 2.6 percent to a seasonally adjusted annual rate of 790,000 units in May from 770, 000 in April, but are 6.7 percent below the 847,000-unit level in May 2006. The median existing condo price was 228,200 dollars in May, down 0.4 percent from a year ago.

The National Association of Realtors is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Source: Xinhua