June 23, 2015 – Fueled partly by an increase in the share of sales to first-time buyers, existing-home sales increased in May to their highest pace in nearly six years, according to the National Association of Realtors. Led by the Northeast, all major regions experienced sales increases in May.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 5.1 per cent to a seasonally adjusted annual rate of 5.35 million in May from an upwardly revised 5.09 million in April. Sales have now increased year-over-year for eight consecutive months and are 9.2 per cent above a year ago (4.90 million).
Lawrence Yun, NAR chief economist, says 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,” he said. “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 four per cent.”
Total housing inventory at the end of May increased 3.2 per cent to 2.29 million existing homes available for sale, and is 1.8 per cent 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 percent share of first-time buyers rose to 32 per cent in May, up from 30 per cent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 per cent 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.”
Single-family and Condo/Co-op Sales
Single-family home sales jumped 5.6 per cent to a seasonally adjusted annual rate of 4.73 million in May from 4.48 million in April, and are and now 9.7 per cent above the 4.31 million pace a year ago.
Existing condominium and co-op sales increased 1.6 per cent to a seasonally adjusted annual rate of 620,000 units in May from 610,000 units in April, and are 5.1 per cent higher than May 2014 (590,000 units).
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