U.S. home sales jumped 2.5% in May, as lower mortgage rates appeared to help buyers overcome affordability challenges.
The National Association of Realtors said Friday that existing homes sold at a seasonally adjusted annual rate of 5.34 million last month, up from 5.21 million in April.
The recent gains likely came from reduced borrowing costs that made it easier to finance a home. Rates for the 30-year mortgage are averaging 3.84% this week, down sharply from 4.57% a year ago, according to the mortgage buying company Freddie Mac.
Still, the real estate market has yet to shake off last year’s slump. Home sales fell 1.1% from a year ago.
The faster pace of sales also boosted prices. The median sales price in May was $277,700, a 4.8% increase from last year.
More homes have come onto the market in the past year, but it’s been insufficient to inject a meaningful amount of inventory that would give would-be buyers more choices.
Sales listings have increased 2.7% from a year ago to 1.92 million homes. But the market contains a mere 4.3 months’ supply of properties, well below the six months that were once deemed to be a sign of a healthy market.
Over the past year, homes prices between $250,000 and $750,000 experienced the strongest sales growth.
But sales of homes at cheaper price points have been flat or falling, a sign that the lack of entry-level homes has been an obstacle for would-be buyers.