Existing Home Sales Tumble, Tarnishing Housing Recovery

Mortgage Rates
John Locher/AP

By Jason Lange

U.S. home resales unexpectedly fell in April as tight inventories pushed prices higher, giving a cautious signal on the strength of the housing market.

The National Association of Realtors said Thursday existing home sales dropped 3.3 percent to an annual rate of 5.04 million units.

March's sales pace was revised up to 5.21 million units from the previously reported 5.19 million units. Economists polled by Reuters had forecast home resales rising to a 5.24 million-unit pace last month.

The relative weakness in home resales puts a dent in what had been one of the brighter spots of the broader U.S. economy after gross domestic product barely grew in the first quarter.

The number of homes on the market last month fell 0.9 percent from a year earlier, helping push the median home price up 8.9 percent from the same month in 2014.

Weak Manufacturing

In another report, the Philadelphia Fed said its business activity index dipped to 6.7 this month from 7.5 in April.

Any reading above zero indicates expansion in the region's manufacturing. Manufacturing has been pressured by a strong dollar and deep spending cuts by energy companies whose profits have been squeezed by lower crude oil prices.

"This is consistent with our expectation that the domestic manufacturing sector will continue to face headwinds from the lagged effects of a stronger dollar and lower energy prices," said Jesse Hurwitz, an economist at Barclays in New York.