Sales of existing homes surged in May to their fastest pace in nearly a decade, a new report showed on Wednesday.
Total sales, which are completed transactions that include single-family homes and condominiums, increased 1.8 percent to a seasonally adjusted annual rate of 5.53 million in May, the fastest pace since February 2007, according to the National Association of Realtors (NAR).
Sales are up 4.5 percent from May 2015.
Stronger demand fueled by low mortgage rates combined with lagging inventory has helped drive up the median sales price to an all-time high.
The median existing-home price in May was $239,700, up 4.7 percent from $228,900 in May 2015, surpassing the peak median sales price set last June of $236,300.
May’s price increase marks the 51st consecutive month of year-over-year gains.
Every region except for the Midwest saw strong sales increases last month.
“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” said Lawrence Yun, NAR chief economist.
“With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,” Yun said.
Steady jobs growth and gradually rising wages are helping boost the housing market, which is a large contributor to the nation’s economic health.
The average 30-year fixed-rate mortgage fell to 3.6) percent from 3.61, which is the lowest since May 2013, according to Freddie Mac.
Total housing supply at the end of May rose 1.4 percent to 2.15 million existing homes available for sale, but is still 5.7 percent lower than a year ago (2.28 million).
Unsold inventory is at a 4.7-month supply at the current sales pace, which is unchanged from April.
“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” Yun said.
“While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers,” he said.
The share of first-time buyers was 30 percent in May, down from 32 percent both in April and a year ago.
Distressed sales — foreclosures and short sales— declined to 6 percent of sales in May, down from 7 percent in April and 10 percent a year ago.
Single-family home sales increased 1.9 percent to a seasonally adjusted annual rate of 4.90 million in May from 4.81 million in April, and are now 4.7 percent higher than the 4.68 million pace a year ago.
Regionally, sales in the Northeast increased 4.1 percent, rose 4.6 percent in the South and jumped 5.4 percent in the West.
Midwest sales fell 6.5 percent last month.