Home Prices Drop 6.3% in May From Year Earlier, FHFA Says
U.S. Home Prices Drop 6.3% in May From Year Earlier
Joshua Lott/Bloomberg
Foreclosures have boosted the supply of available homes and reduced prices because the properties sell at a discount.
Foreclosures have boosted the supply of available homes and reduced prices because the properties sell at a discount. Photographer: Joshua Lott/Bloomberg
U.S. home prices fell 6.3 percent in May from a year earlier as foreclosures weighed down values and purchases slumped.
The decline was led by a 9.9 percent decrease in the region that includes California, the Federal Housing Finance Agency said today in a report from Washington. The second-largest drop was 9.2 percent in the area that includes Nevada and Arizona.
Foreclosures have boosted the supply of available homes and reduced prices because the properties sell at a discount. Low interest rates have done little to stimulate demand for homes as mortgage standards tighten, said Rod Dubitsky, an executive vice president at Pimco Advisory, a unit of Newport Beach, California-based Pacific Investment Management Co., the world’s biggest bond manager.
“Limited mortgage availability and vulnerable consumer health across the income and age spectrum are restraining demand and may continue to do so,” Dubitsky wrote in commentary posted yesterday on Pimco’s website. “We believe the housing market, considered to be a key driver of the economic recovery, will generally remain weak for the foreseeable future.”
Prices rose 0.4 percent from April, the FHFA said. Economists had projected a 0.1 percent increase from the previous month, according to the average of 14 estimates in a Bloomberg survey.
Today’s FHFA report is based on repeat-sales data that compares prices of the same properties over time. The regulatory agency, which measures sales of homes with mortgages backed by Fannie Mae or Freddie Mac, doesn’t provide a specific price.
The median price of a home sold in May, the period covered by the FHFA report, was $169,300, according to the National Association of Realtors.
In June, the median price was $184,300, the Chicago-based trade group said yesterday. Sales of existing U.S. homes fell last month to an annual pace of 4.77 million, the lowest level since November, according to the report.
To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.
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