U.S. home resale was up in May to the highest level in 3-1/2 years, a sign the housing sector recovery is gathering steam and could give the economy a significant boost this year.
The National Association of Realtors said on Thursday that existing home sales advanced 4.2 percent to an annual rate of 5.18 million units, the highest level since November 2009 when a home-buyer tax credit was expiring.
"Whatever inventory is coming onto the market, buyers are ready to snap it up," said Lawrence Yun, an economist at the NAR.
While the sales pace is still below the 5.5 million that is consistent with healthy markets, it has risen nearly 13 percent in the past 12 months.
And with a tight supply of homes on the market, the median sales price rose to $208,000, the highest since July 2008.
"Housing is now the strongest part of the economy in growth terms," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics
With prices rising, more sellers put their properties on the market, lifting the inventory of unsold homes on the market 3.3 percent from April to 2.22 million.
The supply of homes for sales also grew, a sign that more homeowners are confident that they can lure buyers. The number of homes on the market rose 3.3 percent in May to 2.22 million. Still, inventories are 10 percent below year-ago levels.
Still, the report showed that a critical part of the market remains weak. First-time buyers represented only 28 percent of buyers in May. That's down from 34 percent a year ago and significantly below more normal levels above 40 percent. The decline in first-time buyers suggests many younger Americas are unable to get financing.
