U
S existing home sales unexpectedly rose in May, but the trend remains weak due to high mortgage rates. According to the National Association of Realtors, sales climbed 0.8% last month to a seasonally adjusted annual rate of 4.03 million units, surpassing economists' forecasts of a decline to 3.95 million units.

    The sales pace was the slowest for May since 2009, and sales fell 0.7% on a year-over-year basis in May. NAR chief economist Lawrence Yun attributed the subdued sales to persistently high mortgage rates, which have hovered just under 7% this year.

    Yun expects home sales to increase if mortgage rates decrease in the second half of the year. The median existing home price rose 1.3% from a year earlier to $422,800 in May, an all-time high for the month. The inventory of existing homes increased 6.2% to 1.54 million units in May, with supply surging 20.3% from a year ago.

    At the current sales pace, it would take 4.6 months to exhaust the current inventory of existing homes, up from 3.8 months a year ago. A four-to-seven-month supply is considered a healthy balance between supply and demand. First-time buyers accounted for 30% of sales, down from 31% a year ago, while all-cash sales constituted 27% of transactions, down from 28% a year ago.

    A National Association of Home Builders survey showed sentiment among single-family homebuilders plummeted to a 2-1/2-year low in June. The NAHB reported an increase in the share of builders cutting prices to lure buyers and forecast a decline in single-family starts this year.