Boosted by lower mortgage rates, existing home sales, released by the National Association of Realtors (NAR), rebounded in May. This is the first gain in two months.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, climbed 2.5% to a seasonally adjusted annual rate of 5.34 million in May. On a year-over-year basis, sales were 1.1% lower than a year ago. Sales have declined on an annualized basis for more than a year.
The first-time buyer share remained unchanged at 32% in May from last month and was up from 31% a year ago. The May inventory increased to 1.92 million units from 1.83 million units in April, and rose from 1.87 million units compared to a year ago. At the current sales rate, the May unsold inventory represents a 4.3-month supply, up from a 4.2-month supply both last month and a year ago.
Homes stayed on the market for an average of 26 days in May, up from 24 days in April but unchanged compared to a year ago. In May, 53% of homes sold were on the market for less than a month.
The May all-cash sales shared 19% of transactions, down from 20% last month and 21% a year ago.
The May median sales price of all existing homes was $277,700, up 4.8% from a year ago, representing the 87th consecutive month of year-over-year increases. The median existing condominium/co-op price of $257,100 in May was up 5.4% from a year ago.
Regionally, all four major regions saw a growth in existing home sales in May compared to the previous month, ranging from 1.8% in the South and West to 4.7% in the Northeast. On a year-over-year basis, sales were mixed in May. Sales in the South grew 1.3%, while sales in the Midwest and West fell 3.9% and 3.4%. Sales in the Northeast remained unchanged in May.
According to the NAR, the May gain is a positive sign showing consumers are eager to take advantage of favorable conditions. This demand was mainly fueled by lower mortgage rates, which declined to recent low rates. Despite falling mortgage rates, solid demand along with inadequate supply of entry-level housing may drive home prices higher and make home-buying more challenging to new buyers.
Builder confidence declined two points to 64 in June, but remained at a solid range in the low- to mid-60s for the past five months. Though new home sales improved in March and April, builders continued to grapple with excessive regulations, labor shortages and costly building materials that are hurting affordability and depressing supply.