After a lackluster first quarter, existing-home sales climbed 4.9% in May, a rebound attributed to slower price growth due to rising inventory levels and a temporary but slight decline in forward mortgage rates. All four regions of the country experienced sales gains compared to a month earlier.
The National Association of Realtors reports that this increase in existing-home sales, which equates to a seasonally adjusted annual rate of 4.89 million, is the highest monthly rise since August 2011, when sales went up 5.5%.
An increase in the number of homes for sale, in addition to a temporary pause in rising interest rates, is showing promise for home buyers, particularly those new to the market.
Total housing inventory increased 2.2% in May to 2.28 million existing homes available for sale, while unsold inventory is 6% higher than a year ago when there were 2.15 million existing homes available for sale.
Additionally, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped to 4.19% in May from 4.34% in April, and is the lowest since June 2013.
“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market,” Lawrence Yun, NAR chief economist, said in a written release. “Therefore, new home construction is still needed to keep prices and housing supply healthy in the long run.”
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Written by Emily Study