Existing-home sales increased 5.1% in May compared to April and were up 9.2% compared to May 2014, according to the National Association of Realtors (NAR).
It was the strongest pace in six years, NAR says.
Driving the increase was strong turnout from first-time home buyers, who accounted for 32% of all existing-home sales in May – up from 30% of all buyers in April and up from 27% of all buyers in May 2014.
The seasonally adjusted annual rate for existing-home sales was about 5.35 million in May, compared to an upwardly revised 5.09 million in April.
As of May, existing-home sales had increased for eight consecutive months, NAR says.
‘Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and, therefore, provided greater choices for buyers,’ says Lawrence Yun, chief economist for NAR, in a release. ‘However, overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above four percent.’
As of the end of May, there were about 2.29 million existing homes available for sale, up 3.2% compared to April and up 1.8% compared to May 2014. That's a 5.1-month supply at the current sales pace, down from 5.2 months in April.
Due to tight inventory, homes are on the market for shorter periods, comparatively, the research shows.
And home prices keep rising: The average selling price for all housing types in May was $228,700, up 7.9% compared to May 2014.
This, combined with rising interest rates, could take some momentum out of the spring home shopping season.
Yun says the return of first-time home buyers to the market can be attributed to several factors, including ‘strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs.’
‘More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise,’ he adds.
All-cash sales were 24% of transactions in May – down from 32% a year earlier. Individual investors purchased 14% of homes in May, unchanged from April but down 16% from May 2014. Sixty-seven percent of investors paid cash in May.
About 10% of all sales were distressed sales.
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