Home sales rose in May, the latest sign that buyers and sellers remain active in the market despite higher mortgage rates and gloomy economic sentiment.
Existing home sales in May rose 3.2% from a year earlier to a seasonally adjusted annual rate of 4.17 million, according to data from the National Association of Realtors released Tuesday. On a month-on-month basis, home sales also increased by 3.2%.
The May figures are one of the best home sales figures in the last three years. During that time, the housing market has been deeply frozen due to rising mortgage rates and high prices.
“I can’t say definitively whether home sales are really coming out of a crisis, because we know there’s still uncertainty” around oil prices and mortgage rates, said Lawrence Yun, NAR’s chief economist.
On an annual basis, sales increased in all parts of the country except the northeast, where supply remains very limited.
Economists have been hoping that better inventory, slightly lower mortgage rates and strong wage growth will help cautious buyers return to the market this year.
Although the numbers are improving (so far this year, home sales are advancing about 0.7% above last year’s pace), challenges remain to a full housing market recovery.
Mortgage rates, although lower than last year, have stuck at around 6.5% due to the shocks of the Iran war. And while the job market remains strong, wage growth has fallen below inflation, making it harder for buyers to afford a home.
Sales would likely increase if mortgage rates returned to 6%, Yun said. But that is not a given, as inflation and oil price risks persist.
“We have to wait and see,” Yun said.
claire boston He is a senior reporter for Yahoo Finance covering housing, mortgages and home insurance.
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