Existing-home sales posted strong gains in May as increasing inventory continued to temper price growth and the market showed signs of bouncing back from a lackluster first quarter, the National Association of Realtors reported today.
Existing-home sales were up 4.9 percent from April to May, to a seasonally adjusted rate of 4.89 million, but were still down 5 percent compared to a year before, the trade group said.
Growth in real estate image via Shutterstock.
“Homebuyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” said NAR Chief Economist Lawrence Yun in a statement. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”
Total housing inventory in May continued to trend upwards, but the amount of time it would take for home supply to sell out decreased thanks to a faster pace of sales.
The supply of homes was up 2.2 percent from April to May, to 2.28 million existing homes for sale, a 6 percent increase from a year ago. That represents 5.6 months of supply at the current pace of sales, down from 5.7 months in April. Many analysts consider a six-month supply of homes to represent an even balance of buyer and seller demand, with less supply indicating a shortage of homes.
“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market,” Yun noted. “Therefore, new-home construction is still needed to keep prices and housing supply healthy in the long run.”
The median price of an existing home was up 5.1 percent year over year in May to $213,400.