Property data revealed a strengthening in the housing market over the month of May, largely reflecting the positive trends seen from March to April. However, experts note that unless home building picks up, home prices will continue to grow.
Total existing-home sales increased to land at a seasonally adjusted rate of 5.18 million in May, according to the National Association of Realtors. This is a 4.2 percent uptick from the 4.97 million in April, and is a significant improvement since May last year, when total existing-home sales was 12.9 percent lower at 4.59 million units.
"The housing numbers are overwhelmingly positive," said Lawrence Yun, chief economist of NAR. "However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent."
Yun continued to say that the rate at which home prices are rising is too high, and only additional supply will help to level out future price growth. The rate of sales is the highest its been since November 2009. Existing-home sales include single-family homes, co-ops, condominiums and townhouses.
Not your father's housing boom
While there seems to be fear of the 2009 recession repeating, experts say there are differences between the current housing market and the one four years ago. Gary Thomas, president of NAR, noted that the boom period was created by easily accessed credit and an overflow of inventory. Today, mortgage credit is tight, and there is more demand for homes than there is supply.
Through May, total housing inventory experienced an uptick of 3.3 percent, reaching 2.22 million ready-to-sell homes. This number is 10.1 percent lower than in May of 2012. Homes are spending less and less time on the market. The NAR reported that the median time homes spent on the market was 41 days in May, as opposed to 46 days in April and 72 days in May of 2012.
In June, homebuilder confidence in newly-built homes reached a high of 52 on the National Association of Home Builders/Wells Fargo Housing Market Index, indication overall confidence in the housing market, both current and in terms of future trends. The Index rose eight points from May to June, the biggest gain since between August and September of 2002.