According to the latest report from the National Association of Realtors (NAR), existing-home sales increased in May to their highest pace in nearly six years, fueled in part by an increase in the share of sales to first-time buyers.
Led by the Northeast, NAR says that all major regions of the country experienced sales increases.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. Sales have now increased year-over-year for eight consecutive months and are 9.2 percent above a year ago (4.90 million), according to NAR's report.
Lawrence Yun, NAR chief economist, says that May home sales rebounded strongly following April's decline and are now at their highest pace since November 2009 (5.44 million). "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," said Yun. "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 4 percent."
NAR reports that total housing inventory at the end of May increased 3.2 percent to 2.29 million existing homes available for sale, and is 1.8 percent higher than a year ago (2.25 million). Unsold inventory is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.
The median existing-home price for all housing types in May was $228,700, which is 7.9 percent above May 2014. NAR says that this marks the 39th consecutive month of year-over-year price gains.
The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all home 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 downpayment programs," Yun added. "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."
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage climbed in May to 3.84 percent from 3.67 percent in April, but remained below 4.00 percent for the sixth straight month.