Dive Brief:

• Existing home sales rose 1.8% between April and May to a seasonally adjusted annual rate of 5.53 million, the National Association of Realtors reported Wednesday. May's pace was 4.5% higher than May 2015, and it reached its highest level since February 2007.
• Sales grew in all major U.S. regions last month, with the exception of the Midwest. The share of first-time buyers in the U.S. slipped to 30% in May, down from 32% in April.
• The median existing home price in May was $239,700 — 4.7% higher than May 2015. May marked an all-time high for median existing home prices and was the 51st consecutive month of year-over-year price gains.

Dive Insight:

May's existing home sales pace was higher than expected, as economists surveyed by Reuters predicted a 1.1% rise. May was the third consecutive month of existing home sale gains.

NAR Chief Economist Lawrence Yun said the trend of strengthening existing home sales is due largely to "homeowners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize." He noted, however, that the dip in first-time buyer share demonstrates the ongoing struggle for new buyers to enter the market. 

The record-high median home price is the result of tight inventory, according to the NAR, as Yun called current supply levels "subdued." He added in a release, "While new home construction has thankfully crept higher so far this year, there's still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers."

Inventory concerns are an ongoing issue for the residential industry. In response to calls to accelerate new home construction, builders have said that rising regulatory costs — which the NAHB reported can add nearly 25% to a home's price — are keeping them from ramping up construction.

So far this month, housing reports have been mostly positive. Builder confidence rose two points to a score of 60, and housing starts slipped only 0.3% last month after a major boost in April. Today's report will be followed by new home sales Thursday and pending sales next Wednesday.