Sales of existing homes rose to a 5.35 million annual pace in May, the National Association of Realtors reported Monday. May saw the strongest showing for home sales since November 2009, when home buyers were rushing to take advantage of an expiring tax credit.
Sales in May were better than projected. Private-sector economists had expected just over 5 million new home sales.
“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,” National Association of Realtors chief economist Lawrence Yun said.
May’s gain was driven in part by an increase in first-time home buyers.
Home sales are back to the levels reached in the summer of 2013, before the Federal Reserve hinted that it might slow its campaign to purchase bonds and lower interest rates and caused mortgage rates to shoot up temporarily, choking off sales.
Home sales are still well below the pre-crisis pace, when 7 million per year was the norm during the height of the housing bubble.
Yun warned that housing supply remains tight throughout the country, a factor that should keep housing prices up.
It’s hard to find available homes for sale even though inventory is up slightly. There were 2.29 million homes for sale in May, up 3 percent in the month.
The median house price in May was $228,700, according to the release, up 8 percent from a year ago and just short of the record high reached in July 2006.
Yun suggested that the lack of houses for sale would keep prices up even as interest rates rise.
The average interest rate on a 30-year fixed-rate mortgage is 4 percent, according to Freddie Mac. A major question for rates is what will happen after the Federal Reserve moves to raise its target for short-term interest rates from zero. The central bank is expected to act later this year.
The Obama administration and Federal Reserve have both identified a healthy housing market as a key priority for returning the U.S. economy to full health.
The Census Bureau is set to report on new-home sales in May on Tuesday morning. Private forecasters expect that sales will rise from 517,000 the previous month to more than 520,000, according to the Bloomberg.
