U.S. home resales rose in May to a more than nine-year high as improving supply increased choices for buyers, suggesting the economy remains on solid footing despite a sharp slowdown in job growth last month.
The National Association of Realtors said on Wednesday existing home sales increased 1.8 percent to an annual rate of 5.53 million units last month, the highest level since February 2007.
“The economy can’t be going too far off course when home buying is picking up,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
April’s sales pace was revised down to 5.43 million units from the previously reported 5.45 million units. Economists polled by Reuters had forecast sales rising 1.1 percent to a 5.54 million-unit pace in May.
Sales were up 4.5 percent from a year ago.
U.S. financial markets were little moved by the report as investors nervously awaited the outcome of Britain’s referendum on European Union membership on Thursday.
The housing index .HGX was up 0.13 percent. Shares in the nation’s largest home builder, D.R. Horton Inc (DHI.N), were flat while Lennar Corp (LEN.N) rose 0.2 percent.
The strong home resales added to retail sales data in painting an upbeat picture of the economy. That should help allay the fears that were stoked by last month’s paltry job gains.
The higher existing home sales suggest an increase in brokers’ commissions, which should boost the residential investment portion of the gross domestic product report.
Housing is being driven by improving household formation as some young adults find employment and older Americans move into smaller and cheaper homes.
MEDIAN HOUSE PRICE SURGES
Existing home sales surged 4.1 percent in the Northeast and climbed 4.6 percent in the South. Sales in the West, which has seen a strong increase in house prices amid tight inventories, jumped 5.4 percent.
In the Midwest, sales tumbled 6.5 percent last month. The decline, however, followed recent hefty gains.
The number of unsold homes on the market in May rose 1.4 percent from April to 2.15 million units. Supply was, however, down 5.7 percent from a year ago.
In May, new listings typically stayed on the market for 32 days, the shortest period of time since the NAR started tracking the data. That was down from 39 days in April and 40 days a year ago.
At May’s sales pace, it would take 4.7 months to clear the stock of houses on the market, unchanged from April. A six-month supply is viewed as a healthy balance between supply and demand.
Economists say builders will need to ramp up construction of new homes to meet the pent-up demand.
With inventory still tight, the median house price soared 4.7 percent from a year ago to a record $239,700 last month.