http://www.marketwatch.com/story/existing-home-sales-highest-in-seven-months-2014-06-23



WASHINGTON (MarketWatch) — Existing-home sales in May hit the fastest pace in seven months, thanks to a strengthening labor market, expanding inventories and falling mortgage rates, according to data released Monday.

Rising for a second month, sales of existing homes grew 4.9% in May to a seasonally adjusted annual rate of 4.89 million, the National Association of Realtors said. Economists polled by MarketWatch had expected a May rate of 4.75 million, compared with an originally reported pace of 4.65 million in April. On Monday, NAR tweaked April’s rate to 4.66 million.

For context, there was an average monthly sales pace of more than 6 million existing homes over the five years leading up to a 2005 bubble peak.

Recent economic improvements signal that sales rates may continue to pick up, NAR said. Mortgage rates have trended down this year, making home loans more affordable — a drop that could support sales . A gauge of sentiment among home builders recently showed that they are the most confident that they’ve been in five months.

“Sales appear to be moving up again, although the increase to date — over two months — reverses just a fraction of earlier weakening. Sales will need to keep rising to establish a renewed uptrend,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

However, at least one major headwind remains: lenders’ strict standards for who can get a loan. In the wake of the financial crisis, banks erected high standards for purchase loans. And while there has been some easing in recent months, it’s still tough for many families to obtain a loan, particularly first-time borrowers. Federal Reserve Chairwoman Janet Yellen recently commented that banks need more clarity over the extent of their liability in cases of loans that go bad.
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