Home sales rise 4.2% in May
Sales of previously occupied homes in the US rose 4.2% in May surpassing the 5 million seasonally adjusted annual sales rate. The last time this happened was November of 2009, when a home-buying tax credit bumped the sales pace for a short time. Prior to that, sales hadn’t passed the 5 million mark since July 2007.
With this gain, we are definitely seeing the signs of a housing recovery that should be more sustainable throughout the year. On Wednesday, Ben Bernanke the Federal Reserve Chairman, stated that the housing gains are a big reason the Fed’s economic outlook looks brighter.
With steady hiring and low rates, peoples are beginning to have more confidence in the market. Home sales are improving but the supply of homes for sales is tight. Not good news for buyers. “The inventory of homes for sale dipped to a 5.1 month supply, down from 5.2 months in April. That means all the homes would sell in that time frame if no new supply was added and sales continued at May’s pace. Realtors consider a six month supply to be a well balanced market between buyers and sellers” as stated by the National Association of Realtors on Thursday.
A better outlook for housing has made builders more optimistic. The National Association of Home Builders/Wells Fargo builder sentiment index rose in June to 52, up from 44 in May. That was the biggest reading in 7 years. A reading above 50 indicates more builders view sales conditions as good rather than poor. As long as home building doesn’t slow we should see the supply grow.
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