Sales of previously owned U.S. homes unexpectedly fell in May, a sign demand was probably pulled into prior months before a June tax-credit deadline.
Purchases of existing houses, which are tabulated when a contract closes, decreased 2.2% to a 5.66 million annual rate, figures from the National Association of Realtors showed Tuesday.
To receive a government incentive worth as much as $8,000, buyers must have signed contracts by the end of April and need to complete deals by the end of this month.
The decline raises the risk the retrenchment following the expiration of the tax credit will be deeper than anticipated.
Sales "will be pretty soft for the next few months," said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla. "Ultimately, you're going to need job growth to see a sustainable recovery in housing."
Existing home sales were forecast to rise to a 6.12 million rate, according to the median forecast of 74 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6.5 million. The group revised April's sales rate up to a 5.79 million pace from the 5.77 million rate previously reported.
Purchases of existing homes increased 2.7% compared with a year earlier before adjusting for seasonal patterns.
The median price increased 2.7%, to $179,600, from $174,800 in May 2009. The number of previously owned homes on the market dropped 3.4%, to 3.89 million. At the current sales pace, it would take 8.3 months to sell those houses compared with 8.4 months at the end of the prior month.
Declines in inventories have slowed in recent months, posing a risk for the market, Lawrence Yun, the Realtor group's chief economist, said during a press conference. Yun said this "overhang" in supply is a concern and may lead to further declines in property values in coming months.
One reason for the drop in sales last month may be a delay in processing contracts from the surge of buyers trying to qualify for the tax credit, Yun said.
There may be as many as 180,000 buyers who will not be able to close on deals by this month's deadline, said Yun, who called on the government to push the expiration date back.
Federal Reserve policy makers, who wrap up a two-day meeting Wednesday, are forecast to commit to keeping interest rates near zero to help wean the world's largest economy off government stimulus. The hazard posed by the European debt crisis, joblessness and a lack of inflation add to the reasons why central bankers will focus on sustaining the U.S. rebound.