The housing market seems to be recovering from the winter blues.
Existing home sales beat expectations rising 4.9% month-over-month to an annualized pace of 4.89 million units.
Economists were looking for a 1.9% rise to an annualized pace of 4.74 million units.
This was the highest monthly rise since August 2011.
April’s figures were revised to reflect a 1.5% rise to an annualized pace of 4.66 million units. This compares to an initial reading of a 1.3% rise to 4.65 million units.
Inventory was up 2.2% to 2.28 million existing homes for sale which represents a 5.6 month-supply at the current sales pace. This compares to 5.7 months supply in April.
Distressed sales accounted for 11% of sales in May, down from 18% a year ago.
“Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” Lawrence Yun chief economist at NAR said in a press release. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”
One of the key numbers we’ll be watching is the supply of existing home sales — since it’s being argued that housing supply has held back the housing recovery.
“We see little prospect that the uptick in April and May marks the start of a sustained, strong rebound,” Ian Shepherdson at Pantheon Macroeconomics wrote in a note ahead of the release.
He argues that this is because applications for new mortgages are flat or at a low levels and because housing affordability has seen its “biggest deterioration in 32 years.”