Existing-home sales drop for the fifth time in six months

Sales of previously owned U.S. homes unexpectedly cooled in April - the fifth drop in six months - signaling a rocky start for the housing market this quarter amid a still-tight supply of available properties.

Contract closings fell 0.4 percent from the prior month to a 5.19 million annual rate, below all economist estimates, according to data Tuesday from the National Association of Realtors in Washington, D.C.

The median sales price increased 3.6 percent from a year earlier to $267,300, the highest on record for the month of April.

The drop - also the 14th straight year-on-year sales decline - suggests the housing market still is struggling as buyers strain to find affordable options despite lower mortgage rates and steady wage and job gains.

While the supply of homes was up 1.7 percent from a year earlier, the overall level remains relatively low at 1.83 million.

In addition to short supplies, the NAR also cited limits on tax deductions as hampering purchases of higher-priced homes in some states.

Even so, demand remains solid, as properties remained on the market for an average of 24 days, down from 26 days a year ago and a record low in data going back to 2011.

Meanwhile, new-home construction topped estimates in April, while sentiment among builders increased to the highest in seven months in May.

At the same time, permits for single-family homes, a proxy for future construction, fell in April to the lowest level since 2016, signaling continued constraints on available properties.