Sales of existing U.S. homes rose in May as did home prices, according to the National Association of Realtors, as inventory remained unable to keep up with demand.
Total existing home sales rose 4.2 percent to a seasonally adjusted annual rate of 5.18 percent in Mary, up from 4.97 million in April and up 12.9 percent from May 2012. Sales have now risen on a yearly basis for 23 consecutive months.
The median home price grew to $208,000 from $191,800 in April. That is also 15.4 percent higher than the price from one year ago and the strongest price increase in almost eight years, since October 2005. Prices have now risen for 15 straight months on a year-over-year basis.
“The housing numbers are overwhelmingly positive,” commented NAR chief economist Lawrence Yun in a statement. “However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent. The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”
Housing inventory rose 3.3 percent by the end of May to 2.22 million homes for sale. At the current sales price, that represents a 5.1-month supply, down slightly from a 5.2-month supply in April. Total inventory is down 10.1 percent since last year at this time. The NAR considers the market to be balanced between supply and demand when there is a 6-month supply of homes. Part of the inventory shortage problem is that for so long there was an abundance of distressed properties available, but now that reservoir is draining. Foreclosures and short sales made up just 18 percent of sales last month, the same as in April, but down from 25 percent in May 2012. They are currently tying the lowest on record since the NAR began tracking in October 2008. Inventory in the future will have to shift to more new homes as well as existing ones as homeowners gain equity and confidence in the job market.