Sales of pre-owned homes leapt last month to the highest level in more than five years, and it was first-time home buyers who helped fuel the surge.
The sale of existing U.S. homes — including single-family residences, townhomes, condominiums and co-ops — came in at a seasonally adjusted annual rate of 5.35 million in May.
It was the single best month for completed transactions since November 2009, when the pace of home sales was 5.44 million.
The home sales data was reported Monday by the National Association of Realtors.
In April, the annual rate was an upwardly revised 5.09 million.
An increase from May 2014, when the pace was 4.90 million, marked the eighth consecutive year-over-year improvement.
The month-over-month improvement in the Northeast was 11.3 percent — more than any other region.
The rate of single-family home sales rose 5.6 percent from April to 4.73 million.
NAR Chief Economist Lawrence Yun explained in the report that an increase in homes listed for sale — the 2.29 million listings in May were up 3.2 percent from a month earlier and 1.8 percent from a year earlier — provided more choices for home buyers.
“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,” Yun said. “Without solid gains in new home construction, prices will likely stay elevated — even with higher mortgage rates above 4 percent.”
The inventory of homes listed for sale worked out to a 5.1 month supply based on the current pace of sales. In April, the supply was 5.2 months.
The trade group reported that the median existing home price for all property types was $228,700, climbing 7.9 percent from May 2014.
The median home price has risen from a year prior for 39 consecutive months.
At 32 percent, the share of first-time buyers was the highest it’s been since September 2012. In April 2015, the first-time share was 30 percent, while it was just 27 percent in May 2014.
“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 down payment programs,” Yun stated. “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.”
Homes stayed on the market for 40 days as of May 2015. Although that was a day longer than the previous month, it was the third-shortest time since tracking started in May 2011.
Last month’s all-cash share was 24 percent, while investor share was 14 percent. Distressed sales accounted for 10 percent of all sales.
