Sales of existing homes in May roared ahead to set a record-breaking pace, the highest in almost a decade. Increased demand and lagging supply resulted in an all-time high median sales price.
Total existing home sales grew 1.8 percent, according to a report by the National Association of Realtors (NAR). Adjusted seasonally, that translates to an annual rate of 5.53 million single-family homes, townhomes, condominium and co-ops. Sales are up 4.5 percent from May of 2015 and beat the record of 5.79 million set in February 2007.
“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” said Lawrence Yun, NAR chief economist said of the record-breaking numbers. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.”
The median home price for May was $239,700, beating the last record in June 2015 of $236,300. Although total inventory rose 1.4 percent, it’s still 5.7 percent lower than last year.
“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” adds Yun. “While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers.”
Record-breaking home sales by region
Northeast: Existing homes sales increased 4.1 percent to 770,000 units (11.6 higher than May 2015). Median home price $268,600 (0.1 percent decrease from May 2015).
Midwest: Sales down 6.5 percent (1.3 million units) but up 3.2 percent from last year. Median home price $190,000 (4.8 percent increase.
South: Sales up 4.6 percent to 2.28 million units (6.5 percent above last year). Median home price $211,500 (5.9 percent increase)
West: Sales up 5.4 percent to 1.18 million units (down 1.7 percent from last year). Median home price $346,900 (7.7 percent above May 2015).
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