Home buyers who borrow money to purchase homes rather than refinance their existing debt helped push existing home sales in May to their highest rate in six years, according to the National Association of Realtors.
Total existing-home sales – which refer to completed transactions that include single-family homes, townhomes, condominiums and co-ops – rose by 5.1% to a seasonally-adjusted annual rate of 5.35 million in May from an upwardly revised 5.09 million in April, the association reported. Sales have now increased year-over-year for eight consecutive months and are 9.2% above where they stood a year ago, NAR added.
"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," NAR Chief Economist Lawrence Yun reported.
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"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. Without solid gains in new home construction, prices will likely stay elevated — even with higher mortgage rates above 4%."
NAR reported that total housing inventory stood at 2.29 million existing homes, which is 1.8% higher than the figure reported during the same month one year ago. The unsold inventory of homes, however, dropped slightly from a 5.2 month's supply in April.
The association also reported that the median price of an existing home nationwide rose by 7.9% compared to one year ago, marking the 39th consecutive month of year-over-year price increases.
In addition, first-time homebuyers represented 32% of transactions in May 2015, a jump compared to the May 2014 figure of 27% of transactions.
"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 said. "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."
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