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Existing home sales surge in May as housing market heats up

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Existing home sales rose 4.9% in May from April

A wavering housing recovery found firmer footing last month.

Sales of previously owned homes jumped 4.9% from April to a seasonally adjusted annual rate of 4.89 million in May, the National Assn. of Realtors said Monday. It was the largest increase since August 2011 and beat expectations.

Analysts had forecast sales to reach about 4.75 million last month.

The positive report comes as the housing recovery has faltered. The market slowed toward the end of last year after prices surged and mortgage rates rose. High costs have deterred potential buyers and held May sales 5% below a year earlier.

But there are signs buyers are returning. The sales increase from April marked the second consecutive monthly gain, and April's figures were revised upward.  

Buyers are coming off the fence for several reasons, the Realtors said: Mortgage rates have stabilized, and owners are increasingly listing their homes for sale. That's giving buyers more options and tempering price growth.

“The temporary pause in rising interest rates and more homes for sale is good news -- especially for first-time home buyers," the group’s president, Steve Brown, said in a statement.

The number of previously owned homes on sale rose 2.2% from April to 2.28 million last month. 

The median home price reached $213,400 in May, 5.1% higher than a year earlier. It was the smallest gain since March 2012.

Most economists have said the slowdown in price increases doesn't foreshadow a decline in values, but signals more sustainable growth.

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