Existing-home sales, including sales of townhomes, condominiums and co-ops, reached an annual rate of about 5.53 million in May – an increase of 1.8% compared with a seasonally adjusted annual rate of about 5.43 million in April and an increase of 4.5% compared with about 5.29 million from May 2015, according to the National Association of Realtors (NAR).
That’s the highest pace in almost a decade, according to NAR. It was also the third straight month that existing-home sales increased – which is typical for the spring home buying season.
Meanwhile, the national median home price hit an all-time high of $239,700, up 4.7% from $228,900 in May 2015, due mainly to tight inventory. This average also surpasses the peak median sales price of $236,300 set last June. May was the 51st consecutive month of year-over-year price gains, NAR says.
“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade up or downsize,” says Lawrence Yun, chief economist for NAR, in a statement. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.”
“Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer,” he adds.
As of the end of May, there were about 2.15 million existing homes available for sale – an increase of 1.4% compared with April but a decrease of 5.7% compared with May 2015.
That’s about a 4.7-month supply at the current sales pace.
“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” adds Yun. “While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers.”
About 30% of existing-home sales in May were to first-time borrowers – down from 32% both in April and a year ago.