As first-time buyers enter the housing market, the total number of existing-home sales saw the largest increase in May than it has in nearly six years, according to a report by the National Association of Realtors (NAR). May home sales experienced a growth spurt following April's decline and are now at their highest pace since November 2009. All major regions experienced sales increases in May, led by the Northeast.
According to NAR, total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, increased by 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May from an upwardly revised 5.09 million in April. Sales have now seen increased year-over-year for eight consecutive months and are 9.2 percent (4.90 million) above a year ago.
"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 Lawrence Yun, NAR’s chief economist. "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."
Total housing inventory increased by 3.2 percent to 2.29 million existing homes available for sale at the end of May, and is 1.8 percent higher than the 2.25 million homes for sale a year ago, the report says. Meanwhile, unsold inventory dropped down to a 5.1-month supply at the current sales pace for May, down from 5.2 months in April.
Single-family home sales increased by 5.6 percent to a seasonally adjusted annual rate of 4.73 million in May from 4.48 million in April, and are and now 9.7 percent above the 4.31 million pace a year ago, the report says. The median existing single-family home price was $230,300 in May, up 8.6 percent from May 2014.
"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," 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."
Chris Polychron, NAR president and executive broker with 1st Choice Realty in Hot Springs noted that Realtors overwhelmingly support the Consumer Financial Protection Bureau's proposal of a two-month delay for the implementation of the new TILA-RESPA Integrated Disclosure, or TRID, regulation.
"NAR has long advocated the need to avoid implementing the new regulation during the peak buying season," Polychron said. "With interest rates on the rise, many families wanting to buy are looking to lock-in at current rates and move into their new home before the school year starts. Holding off on TRID implementation through the summer helps these buyers avoid any disruption or delays in closings that could develop once the regulation goes into effect."
Click here to view the National Association of Realtors' Existing-Home Sales Report.