WASHINGTON -- Sales of existing homes posted a better-than-expected 4.3 percent increase in May, a sign that despite rising interest rates, the housing market remains strong.
The National Association of Realtors said Monday that the May advance pushed sales to a seasonally adjusted annual rate of 5.09 million units. That compared to a rate of 4.88 million sales in April, which reflected a 6.2 percent drop from the March level.
Housing analysts said the strength in May in part reflected the fact that more homes than normal were put on the market in March and April after strong demand in earlier months had pushed the inventory of unsold homes to a record low.
''Many buyers were frustrated in early spring because there simply weren't enough homes on the market,'' said Dennis R. Cronk, the president of the Realtors group. ''Many homes listed in March and April received quick offers, resulting in a higher number of transactions closed in May.''
The sales jump came as a surprise to many economists who had been expecting home resales would be unchanged or even dip slightly as the housing market cooled under the impact of six interest rate increases over the past year by the Federal Reserve.
The central bank was meeting Tuesday and Wednesday with economists predicting Fed officials will decide to leave rates unchanged this time, preferring to wait to see if the rate increases already implemented will work as intended to slow economic activity enough to keep inflation in check.
Fred Flick, the Realtors' chief economist, said some of the May strength reflected efforts by buyers to close deals before rates moved higher.
''The effects of higher interest rates in May will be working their way through the market and we are expecting sales to slow over the second half of the year,'' he said.
For May, sales were up in all regions of the country, led by a 7.5 percent rise in the Midwest, where home resales climbed to an annual rate of 1.15 million units.
Brainerd Dispatch ©2013. All Rights Reserved.