Existing Home Sales Rose 5.1% in May

Existing home sales bounced up at the highest pace in nearly six years in May, resuming improvement in the housing market after an unexpected decline in April. Sales closed on 5.35 million pre-constructed homes, condos and co-ops last month, up 5.1% from April’s 5.09 million, the National Association of Realtors (NAR).

That’s above economists’ expectations of 5.25 million, based on a Bloomberg survey. The jump was due to an increase in homes bought by first-time homebuyers and an expanded total supply of houses, according to the real estate trade group.

Thirty-two percent of homebuyers in May were purchasing a home for the first time, up five percentage points from a year ago. That’s after Fannie Mae and Freddie Mac introduced policy changes to help young people buy their first homes, said Patrick Newport and Stephanie Karol, economists at research firm IHS Global Insight. Total housing inventory also increased 3.2% from April, to 2.29 million homes for sale, up 1.8% from 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 chief economist. Sales are now at their highest pace since November 2009.

The May numbers show an improvement from April, when sales declined 3.3%, with a 3.7% slide in single-family homes. April sales dipped due to higher prices, economists said, with demand for houses outpacing supply and driving up sticker prices. On top of rising prices and competitive bidding, an interest rate hike by the Federal Reserve later in the year could lead to higher mortgage rates, economists said.