US sales of previously owned homes expected to show modest gain in May but still lag 2013 pace

The National Association of Realtors reports on sales of existing homes in May. The report will be released at 10 a.m. Eastern time Monday.

SALES UP: The expectation is that sales rose at an annual rate of 4.73 million in May, according to a survey by FactSet.

HOUSING SLOWDOWN: In April, sales rebounded slightly, but the pace of buying remained below last year's level. Purchases over the past 12 months have dropped 6.8 percent. Would-be buyers are grappling with a limited supply, more expensive homes and higher mortgage rates.

Five years into the recovery from the recession, housing sales have yet to return to their historic averages. Demand remains strong for the most expensive homes but has faltered for starter homes and those priced for middle class buyers.

The pace of home sales is below the 5.1 million homes sold in 2013 and off the pace of 5.5 million annual sales that would be consistent with a healthy housing market.

The median price of a home sold in April was $201,700, 5.2 percent higher than a year ago, but it was the slowest annual increase since the spring of 2012.

The upper-tier of the market remains healthier than the low-end. In April, sales continued to fall for homes priced below $250,000 while they rose for homes price above $750,000. The first-time buyers that tend to purchase lower-priced homes represented 29 percent of all sales in April, far below the historical average of 40 percent.

Sales of existing homes began to slow in the second half of 2013 as mortgage rates crept up from historic lows, but home prices continued to rise due to a lack of available homes for sale.

Average rates for 30-year fixed-rate mortgages declined to 4.17 percent last week, down from 4.20 percent the previous week. Mortgage rates are about a quarter of a percentage point higher than they were at the same time last year.

The government reported last week that the pace of home construction slipped a bit in May with builders starting work at a seasonally adjusted annual rate of 1.01 million homes, down 6.5 percent from the April level of 1.07 million.