The numbers: Existing-home sales were at a 5.34 million seasonally adjusted annual pace in May, the National Association of Realtors said Friday.
Sales of previously-owned homes were 2.5% higher than in April, but 1.1% lower than the selling pace a year ago. The MarketWatch consensus forecast was for a 5.28 million annual rate.
What happened: The median selling price in May was $277,700, a 4.8% annual increase and the 87th straight month of annual price increases.
The Northeast, where sales have been socked by high prices and the loss of the ability to deduct property taxes from federal returns, saw a 4.7% jump in sales in May. In the Midwest, sales were up 3.4%. In both the South and the West, sales ticked up 1.8%.
Big picture: The housing market may have reached a natural peak, but conditions are still tight after years of pent-up demand. At the current pace of sales, it would take 4.3 months to exhaust available supply, still well below the 6-month threshold that’s traditionally been considered a marker of a balanced market, even though inventory increased during the month. Properties stayed on the market for an average of 26 days in May, up a bit from 24 days in April but still a sign of a strong seller’s market.
What they’re saying: “The data on existing-home sales for May showed a number of positive trends,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. NAR’s not-seasonally-adjusted sales numbers showed 540,000 homes were sold during the month, up from 535,000 a year ago, he pointed out.
Also, “the inventory of homes on the market increased, both in raw numbers and in terms of month’s supply,” Fratantoni said. “Tight inventories remain a constraint on the pace of sales, but it is good to see more supply coming onto the market.”
“The bigger picture here, we think, is that the market for existing homes is finding its feet after last year’s disaster in regions hit by the capping of state and local tax deductions,” said Pantheon Macros’ Ian Shepherdson on Thursday.
Market reaction: The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +1.50% is hovering near a two-year low. That’s great for would-be home buyers, but it’s also a warning signal about the future of the economy. If growth stalls, riskier assets like stocks SPX, -0.39% are less attractive to investors. When bond prices rise, yields fall, and vice versa.