The latest existing home sales data report from the NAR showed U.S. home resales rose more than expected in May and the inventory of properties up for sale was the highest in more than 1-1/2 years, a welcomed piece of optimistic news in an otherwise weak housing market.
The National Association of Realtors said Monday that existing home sales increased by 4.9 percent to an annual rate of 4.89 million units, which is the largest gain since August 2011.
Meanwhile, April’s increase was revised slightly up to a 4.66 million units from the previously reported 4.65 million units.
Economists polled by Reuters had forecast sales rising by just 2.2 percent to a 4.73 million-unit pace last month, based upon a rash of bad economic data points.
The housing market and so-called recovery completely fell on its face in the second half of 2013. The housing market is still hanging by a thread, relying upon artificial and dangerous government regulations and rules to regain momentum after a small increase in mortgage rates and temporary modest price increases stifled demand.
Earlier this month, two policy statements made by Mel Watt, director of the Federal Housing Finance Agency (FHFA), and Shaun Donovan, secretary of HUD, backed-off tight restrictions that required sound lending practices, repeating the mistakes of the subprime mortgage crisis.
Even though there has been several consecutive months of increases, sales were still down 5.0 percent compared to May of last year and they are currently down 9 percent from a peak of 5.38 million units hit in July.
Further, the FHFA is the regulator of Fannie Mae and Freddie Mac, which along with the Federal Housing Administration (FHA) are responsible for guaranteeing about 75 percent of all mortgage credit in the United States. In an effort to boost a failing housing market, they’ve abandoned the rules against underwriting risky mortgages. While homebuilder confidence remains relatively dim, government regulators are less concerned about repeating the mistakes that led to the housing crisis and more concerned with political implications of a weak economy.