On the heels of promising housing starts figures from last month, May's existing-home sales also experienced a sizeable year-over-year bump, according to the National Association of Realtors.
May's total existing-home sales rose 4.2% to a seasonally adjusted annual rate of 5.18 million, up from 4.97 million in April and delivering growth of 12.9% from May 2012's 4.59 million rate. This is the highest it's been since the tax stimulus of November 2009, with sales staying above year-ago levels for the past 23 months. The national median existing-home price for all sales came in at $208,000, up 15.4% from last year's figures and marking the strongest price gain since October 2005.
NAR chief economist Lawrence Yun cautioned that though the market is strengthening, supply will not be able to support the current growth rate unless new home construction quickens its pace.
"The housing numbers are overwhelmingly positive," said Yun. "However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50%. The home price growth is too fast, and only additional supply from new home building can moderate future price growth."
Total housing inventory is up 3.3% in May and is strong enough to support a 5.1-month supply at the current sales rate, down slightly from 5.2 months in April.
"The issue now is pent-up demand and strong growth in the number of households, with buyer traffic 29% above a year ago, coinciding with several years of inadequate housing construction," said NAR president Gary Thomas. "These conditions are contributing to sustainable price growth."