Existing US home sales outpace forecasts in May

Existing home sales in the States rose past forecasts last month as some buyers managed to overcome the challenging market conditions that were prevailing in many areas.

Total home sales grew by 1.1% month-on-month to reach an annualised pace of 5.62m, according to the National Association of Realtors.

A robust jobs market and the recent downward trend in mortgage rates combined buoyed buyer interest at a high level, NAR chief economist Lawrence Yun explained.

"Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher," he said.

Economists had forecast a rate of 5.53m.

The supply of homes available for sales continued to be limited, NAR said, with unsold inventory standing at 4.2-months' worth.

That was down from 4.7 months' worth in May of 2016.

A preliminary estimate of 5.57m new home sales for April was revised lower to 5.56m.

At $252,800, median home prices hit a new peak and were up by 5.8% year-on-year.

Commenting on the data, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The inventory data signal even faster price increases ahead, pushing implied real mortgage rates further below zero and, hence, attracting new potential buyers into the market. The rising trend in mortgage applications in recent months points clearly to new cycle highs for home sales over the summer."