United States home resales grew past a nine-year high in May, as improving supply diversified choices for buyers. This spike suggests that the national economy remains solid, despite a slowdown in job growth reported last month. The National Association of Realtors said Wednesday that home sales increased by 1.8% to an annual rate of 5.53 million units in May. This is its highest level since February 2007. April’s sales were down to 5.43 million units from the previous reported 5.45 million units. In an official poll, economists forecasted sales rising by 1.1 percent to a 5.54 million-unit pace for the month of May.
The country’s financial markets stayed unchanged by the report, as investors focused more on the highly anticipated outcome of Britain’s Thursday referendum on European Union membership. The housing index (.HGX) grew by 0.13%. The healthy home sales promote an increase in broker’s commissions, which boosts the residential investment portion of the U.S. gross domestic product report. Housing is currently driven by improving household formations, as young adults are finding new employment and older Americans are downsizing.
Existing home sales grew by 4.1% in the Northeast region and spiked 4.6% in the South. Sales for the western part of the U.S. jumped by 5.4%. In the Midwest, sales fell last month by 6.5% but have rallied in recent days. The number of unsold homes on the market rose by 1.4% to 2.15 million units, however that number is down 5.7% from this time a year ago. At May’s sales pace, it is estimated to take about 4.7 months to clear the houses on the market. A six-month supply is a healthy balance between demand and supply.
Analysts say that builders need to pump up their construction of new homes in order to meet the continuously growing demand. The median house price grew by 4.7% from a year ago to $239,700 last month. This is a record number for inventory. Last month, the percentage of first-time buyers fell from 32% to 30% in both April, and a year ago.