Existing-home sales rose 4.9% in May, compared to April – the largest monthly increase since August 2011, according to the National Association of Realtors (NAR).
As of May, existing-home sales were running at a seasonally adjusted annual rate of 4.89 million – compared to an upwardly revised 4.66 million in April. All four regions of the country experienced sales gains.
Despite the increase, existing-home sales were still about 5% below the 5.15 million-unit level seen in May 2013. What's more, most of the increase was in high-end luxury homes priced $1 million or more.
‘Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,’ says Lawrence Yun, chief economist for NAR, in a release. ‘Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.’
Total housing inventory climbed 2.2% in May to reach 2.28 million existing units – a 5.6-month supply at the current sales pace. This is down slightly from the 5.7-month supply seen in April.
Unsold inventory in May was 6% higher than a year ago, when there were 2.15 million existing homes available for sale, NAR reports.
The median existing-home price for all housing types in May was $213,400 – an increase of about 5.1% compared to May 2013.
‘Rising inventory bodes well for slower price growth and greater affordability, but the [number] of homes for sale is still modestly below a balanced market,’ Yun adds. ‘Therefore, new home construction is still needed to keep prices and housing supply healthy in the long run.’
Earlier this month, NAR reported new home construction activity is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation.
Distressed sales – including foreclosure sales and short sales – accounted for 11% of May sales, down from 18% in May 2013. About 8% were foreclosures and 3% were short sales.
Foreclosures sold for an average discount of 18% below market value, while short sales were discounted 11%.
About 27% of May existing-home sales were to first-time buyers, down from 29% in April.
All-cash sales comprised 32% of transactions in May, unchanged from the previous month and down slightly from 33% in May 2013. Individual investors, who account for many cash sales, purchased 16% of homes in May, down from 18% in April. About 68% of investors paid cash in May.
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