US existing home sales rise in May; mortgage rates still a constraint

WASHINGTON (Reuters) -U.S. existing home sales unexpectedly increased in May, but the trend remained weak amid high mortgage rates.

Home sales climbed 0.8% last month to a seasonally adjusted annual rate of 4.03 million units, the National Association of Realtors said on Monday. Economists polled by Reuters had forecast home resales falling to a rate of 3.95 million units.

The sales pace was the slowest for the month of May since 2009.

Sales fell 0.7% on a year-over-year basis in May.

"The relatively subdued sales are largely due to persistently high mortgage rates," said Lawrence Yun, the NAR's chief economist. "If mortgage rates decrease in the second half of this year, expect home sales across the country to increase."

The average rate on the popular 30-year fixed-rate mortgage has hovered just under 7% this year. President Donald Trump's aggressive tariffs on imported goods have heightened uncertainty over the economy, which the Federal Reserve has responded to by pausing its interest rate cutting cycle.

The U.S. central bank last week kept its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Fed Chair Jerome Powell told reporters he expected "meaningful" inflation ahead due to the import duties.