Sales of existing homes jumped in May to their highest pace in nearly six years, helped by a greater share of first-time buyers, according to the National Association of Realtors.
Led by the Northeast, all U.S. saw increases last month, with completed transactions that include single-family homes, townhomes, condominiums and co-ops rising 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. That’s up from an upwardly revised 5.09 million in April.
The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers accounted for 27 percent of all buyers.
Home resales have now increased year-over-year for eight consecutive months and are 9.2 percent above a year ago.
More homes for sales also helped. Total housing inventory at the end of May increased 3.2 percent to 2.29 million existing homes available for sale, and is 1.8 percent higher than a year ago (2.25 million). Unsold inventory is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.
However, inventories remain tight and prices are still rising.
“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 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, Yun added — “even with higher mortgage rates above 4 percent.”
Median Price Up to $228,700
The median existing-home price for all housing types in May was $228,700, which is 7.9 percent above May 2014. This marks the 39th consecutive month of year-over-year price gains.
“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.”
Distressed sales — foreclosures and short sales — remained at 10 percent for the third consecutive month in May and are below the 11 percent share a year ago.
All-cash sales were 24 percent of transactions in May for the third straight month and are down considerably from a year ago (32 percent). Individual investors, who account for many cash sales, purchased 14 percent of homes in May, unchanged from last month and down from 16 percent in May 2014. Sixty-seven percent of investors paid cash in May.