Existing home sales in the United States increased by 5.1% in May year on year to their highest pace in nearly six years, partly fueled by an increase in first time buyers.
The latest data from the National Association of Realtors shows that all regions, led by the North East, saw sales increase. They have risen year on year for eight consecutive months and are 9.2% above a year ago.
The median existing home price for all housing types in May was $228,700, which is 7.9% above May 2014, the 39th consecutive month of year on year price gains.
According to NAR chief economist Lawrence Yun May home sales rebounded strongly following April’s decline and are now at their highest pace since November 2009.
‘Solid sales gains were seen throughout the country in May as more home owners listed their home for sale and therefore provided greater choices for buyers,’ he said but added that 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 4%,’ he explained.
The data also shows that total housing inventory at the end of May increased 3.2% to 2.29 million existing homes available for sale, and is 1.8% higher than a year ago. Unsold inventory is at a 5.1 month supply at the current sales pace, down from 5.2 months in April.
The percent share of first time buyers rose to 32% in May, up from 30% in April and matching the highest share since September 2012. A year ago, first time buyers represented 27% of all buyers.
‘The return of first time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs,’ said Yun.
‘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,’ Yun added.
With demand continuing to far exceed supply, properties typically stayed on the market for 40 days in May, up from 39 days in April but the third shortest time since NAR began tracking in May 2011.
Short sales were on the market the longest at a median of 131 days in May, while foreclosures sold in 56 days and non-distressed homes took 38 days. Some 45% of homes sold in May were on the market for less than a month.
All cash sales were 24% of transactions in May for the third straight month and are down considerably from a year ago when they were 32%. Individual investors, who account for many cash sales, purchased 14% of homes in May, unchanged from last month and down from 16% in May 2014. Some 67% of investors paid cash in May.
Distressed sales, that is foreclosures and short sales, remained at 10% for the third consecutive month in May and are below the 11% from a year ago. Some 7% of May sales were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 15% below market value in May compared to 20% in April, while short sales were also discounted 16% compared to 14% in April.
A breakdown of the figures shows that single family home sales jumped 5.6% to a seasonally adjusted annual rate of 4.73 million in May from 4.48 million in April, and are and now 9.7% above the 4.31 million pace a year ago. The median existing single family home price was $230,300 in May, up 8.6% from May 2014.
Existing condominium and co-op sales increased 1.6% to a seasonally adjusted annual rate of 620,000 units in May from 610,000 units in April, and are 5.1% higher than May 2014. The median existing condo price was $216,400 in May, which is 1.9% higher than a year ago.
May existing home sales in the Northeast jumped 11.3% to an annual rate of 690,000, and are now 11.3% above a year ago. The median price in the Northeast was $269,000, which is 4.8% higher than May 2014.
In the Midwest, existing home sales rose 4.1% to an annual rate of 1.27 million in May, and are 12.4% above May 2014. The median price in the Midwest was $181,900, up 9.4% from a year ago.
The data also shows that existing home sales in the South increased 4.3% to an annual rate of 2.18 million in May, and are 6.9% above May 2014. The median price in the South was $198,300, up 8.2% from a year ago.
Existing home sales in the West climbed 4.3% to an annual rate of 1.21 million in May, and are 9% above a year ago. The median price in the West was $324,000, which is 10.2% above May 2014.
This article was republished with permission from Property Wire.