Bringing some good news to the industry after a weak month for housing starts, existing-home sales peaked sharply in May to a seasonally adjusted annual rate of 4.89 million -- the highest month-over-month gain since August 2011, according to the National Association of Realtors.
Single-family home sales rose even more -- 5.7% -- to a seasonally adjusted annual rate of 4.30 million.
“Home buyers 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, citing a 2.2% climb in total housing inventory. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”
The median existing-home price was $213,400 in May, a 5.1% increase since last year that's been tempered by the growth in inventory. Yun cautioned that inventory levels are still not quite where they need to be to maintain healthy levels of supply and affordability. That means housing starts need to pick up the pace, and soon.
NAR president Steve Brown said there's positive momentum in housing fundamentals, and those buyers who were left out of the market when prices and interest rates began rising last summer have a chance to get in the game now that conditions have slowed.
April's total existing-home sales were revised up to a rate of 4.66 million. May's number is still 5.0% below May 2013's 5.15 million-unit level, however.