So much for a slowing housing market. The National Association of Realtors (NAR) reports existing home sales in May surged ahead at their fastest pace since before the financial crisis.
Sales rose sharply in spite of tight inventory and steadily rising prices, suggesting there is building demand in the housing market.
Total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 1.8% to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April.
With that strong gain, sales are now up 4.5% from May 2015 and are at their highest annual pace since February 2007. With the arrival of the financial crisis in September 2008, home sales plunged and foreclosures surged.
Lawrence Yun, NAR chief economist, says low interest rates have helped, but he credited the huge advance in May to more homeowners realizing they now have enough equity in their homes to sell and move up.
“With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,” Yun said.
Yun concedes any slowdown in the job market could temper the strong growth in housing. As long as the job market remains at its present level, he says sales could maintain this pace throughout the summer.
Not only were more homes selling in May, more expensive homes were selling. The median sale price was $239,700, up 4.7% from May 2015. May’s price increase marks the 51st consecutive month of year-over-year gains.