May showed a big increase in the number of existing homes, showing that there are homebuyers ready to get back in the market, but they seem to prefer the charm of older houses rather than new builds.
In May, existing home sales increased 4.9% to 4.89 million seasonally adjusted annual rate (SAAR) which was higher than consensus’ estimate of 4.8 million SAAR and the revised April reading of 4.66 million SAAR (revised up from 4.65 million). From an economic standpoint, the biggest concern is that first-timer homebuyers are still waiting on the sidelines for economic conditions to improve.
Purchases by first-time home buyers accounted for only 27% of all sales in May, which was down from 29% in April. When economic conditions are normal, first-time buyers account for a third of all home purchases. While mortgage rates were low in both May and early June, economists expect rates to increase throughout the rest of the year. While not perfect, this sets up a firm foundation for growth in home sales and for several home industries to continue to improve.