Existing Home Sales 2nd Highest in History

Sales of existing homes slowed slightly in May but still came in at the second-highest level on record, with home prices hitting an all-time high.

Sales of previously owned homes and condominiums edged down 0.7 percent last month, the National Association of Realtors reported Thursday. The small decline left sales at a seasonally adjusted annual rate of 7.13 million units, down only slightly from the 7.18 million sales pace in April, which had been an all-time high.

Even with the small drop in sales, home prices moved higher, to an all-time record of $207,000 for the median price, the point where half the homes sold for more and half for less.

The new report was likely to do little to lessen concerns that the housing market in some parts of the country is caught in the grip of a speculative fever similar to the stock market bubble of the late 1990s before prices came crashing back to earth.

Federal Reserve Chairman Alan Greenspan, while discounting the possibility of a national housing bubble, has talked of "froth" in local markets that have seen sizable run-ups in prices over the past year. He has also expressed concerns that home buyers are using types of mortgages that let them purchase more expensive homes with less of a downpayment, leaving them vulnerable if prices do fall sharply.

David Lereah, chief economist of the Realtors group, said he too was concerned about the reliance on interest-only mortgages and other types of mortgages offered with low down payments.

"I worry about a high level of questionable loans in those bubble areas. That could make those markets more fragile," Lereah said.

The good news on home sales and jobless claims was ignored on Wall Street, where investors focused instead on a poor earnings report from FedEx Corp. and on surging oil prices, which briefly moved past the psychologically important $60 per barrel mark for the first time.