The housing market is heating up.
Beating predictions, existing home sales surged 4.9 percent in May – the largest increase since August 2011. The National Association of Realtors said sales of previously owned homes hit a seasonally adjusted annual rate of 4.89 million in May, according to USA Today.
Existing home sales were also up in April. Although two months of increased sales is good news for the housing industry, May sales were still down 5 percent from last May. USA Today said:
Compared with last year, much of the growth came in the higher-priced tiers of the market. Sales of homes under $100,000 and between $100,000 to $250,000 fell in every region of the country last month compared with May 2013.
The median existing home price was $213,400 in May, up 5.1 percent from a year earlier.
So, what seems to be driving the increase in sales? “A bigger supply of houses, smaller price gains, rising employment and still-low borrowing costs may encourage more Americans to come into the market,” Bloomberg said. (See: “Americans Demand Super-Sized Housing.”)
Ara Hovnanian, chief executive officer of Hovnanian Enterprises – New Jersey’s largest home builder — said he is hopeful that housing demand will continue to grow, although we have a long road ahead. Bloomberg added:
Household formation will be the primary driver of long-term housing demand, he said, and “the creation of well-paying jobs will go a long way” toward boosting the market. “Given the low levels of total U.S. housing starts, we remain convinced that we are still in the early stages of the housing industry recovery,” Hovnanian said.
What do you think of the recent uptick in existing home sales? Do you expect housing sales to continue to increase? Share your thoughts below or on our Facebook page.