U.S. sales of previously owned homes reached an annual pace of 5 million for the first time since October 2013, while rising inventory continues to push overall supply toward a more balanced market, a leading industry group said Tuesday.
Existing home sales, which tally completed transactions for single-family houses, townhouses and condominiums, increased 2.6 percent from May to a seasonally adjusted annual rate of 5.04 million in June, the National Association of Realtors (NAR) said in a report.
NAR chief economist Lawrence Yun said housing fundamentals are moving in the right direction as inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country.
"This bodes well for rising home sales in the upcoming months as consumers are provided with more choices," he added.
"On the contrary, new home construction needs to rise by at least 50 percent for a complete return to a balanced market because supply shortages," he noted. He argued that stagnant wage growth is holding back what should be a stronger pace of sales.
The median existing home price for all housing types rose 4.3 percent from a year ago to 223,300 U.S. dollars in June.
Housing inventory at the end of June jumped 2.2 percent to 2.3 million, which represents a 5.5-month supply at the current sales pace, unchanged from May.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped to 4.16 percent in June from 4.19 percent in May, the lowest since June 2013.
Existing home sales account for a larger share of the market than new home sales. The housing market has been a bright spot in the U.S. economy recovery, but it showed signs of cooling down in late 2013 with higher mortgage rates and limited inventory.