WASHINGTON: Sales of existing homes rebounded in May after April’s surprise dip, and prices edged higher, according to industry figures released Wednesday.
The National Association of Realtors said strong demand and inexpensive mortgages were driving up prices at an unsustainable rate.
Sales of existing homes rose 1.1 percent last month to an annual rate of 5.62 million, seasonally adjusted, but the increase appeared larger after April’s already-low numbers were revised downward.
The sales pace beat analyst expectations and was 2.7 percent above the same month last year.
Prices also rose for the 63rd straight month, with the median cost for all housing types hitting $252,800, a new peak and up 5.8 percent over May of last year.
Meanwhile, housing inventory rose slightly for the month but remained very tight. Supply gained 2.1 percent for the month, with the existing pool of homes hitting 1.96 million. But this was still 8.4 percent lower than the supply recorded in May 2016 and the 12-month measure has fallen for 24 consecutive months.
The current sales rate indicates a supply of just 4.2 months, down from 4.7 months in the same month of last year.
“Home prices keep chugging along at a pace that is not sustainable in the long run,” NAR chief economist Lawrence Yun said in a statement.
“Current demand levels indicate sales should be stronger but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”
Homes typically changed hands in 27 days in May, down from 29 days in April and 32 days in May 2016
The figures follow the government data last week showing the pace of new home construction fell in May for the third month in a row.
Industry observers point to the current tight labor market as well the high volume of housing held by investors as reasons for the failure of supply to keep pace with demand.
Ian Shepherdson of Pantheon Macroeconomics said sales and prices are likely to continue to rise.
“The inventory data signal even faster price increases ahead, pushing implied real mortgage rates further below zero and, hence, attracting new potential buyers into the market,” he wrote in a research note.
“The rising trend in mortgage applications in recent months points clearly to new cycle highs for home sales over the summer.”