WASHINGTON—Sales of existing homes rose to their highest level in more than nine years and prices climbed to a new peak in May, the latest sign of rising demand amid steady job creation and low interest rates.
Sales climbed 1.8% in May from the prior month to a seasonally adjusted annual rate of 5.53 million, the National Association of Realtors said Wednesday. That was the strongest pace since February 2007. April’s sales figure was revised down to 5.43 million.
The national median sale price for a previously owned home, meanwhile, was $239,700, up 4.7% from a year earlier and the highest figure recorded by the Realtors’ group. Home prices are rising faster than wages across much of the U.S., potentially damping sales.
“Low inventory, especially for starter and tradeup homes, continues to stifle home sales activity,” said Ralph McLaughlin, chief economist at real estate website Trulia. “Finding a home is increasingly a challenge for both first and second-time homebuyers.”
Demand for homes has been especially strong as more Americans find work, wages edge higher and mortgage rates remain historically low. But home builders haven’t been keeping up, raising questions about future gains for the market.
Existing homes make up roughly 90% of the housing market while new-home sales account for the remaining share. In 2015, existing-home sales came in at a pace of 5.25 million, the highest level since 2006. NAR predicts the pace of existing-home sales to rise further this year. Before Wednesday’s release, the group was forecasting a 3% gain to 5.41 million.