Existing home sales in the United States increased 2.5% in June and reached an annual pace of five million sales for the first time since October 2013, according to the latest index from the National Association of Realtors.

The median existing home price for all housing types in June was $223,300, which is 4.3% above June 2013. This marks the 28 th consecutive month of year on year price gains, the index shows.

It also says that rising inventory continues to push overall supply towards a more balanced market, but sales remain 2.3% below the 5.16 million unit level a year ago.

‘Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country,’ said Lawrence Yun, NAR chief economist.

‘This bodes well for rising home sales in the upcoming months as consumers are provided with more choices. On the contrary, new home construction needs to rise by at least 50% for a complete return to a balanced market because supply shortages, particularly in the West, are still putting upward pressure on prices,’ he explained.

He also noted that stagnant wage growth is holding back what should be a stronger pace of sales. ‘Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month. However, the lack of wage increases is leaving a large pool of potential homebuyers on the side lines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability,’ he added.

Total housing inventory at the end of June rose 2.2% to 2.3 million existing homes available for sale, which represents a 5.5 month supply at the current sales pace, unchanged from May. Unsold inventory is 6.5% higher than a year ago, when there were 2.16 million existing homes available for sale.

The data shows that distressed homes, that is foreclosures and short sales, accounted for 11% of June sales, down from 15% in June 2013. Some 8% of June sales were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 20% below market value in June, while short sales were discounted 11%.

The percent share of first time buyers continues to underperform historically, rising slightly to 28% in June from 27% in May, but remain at an overall average of 28% over the past year.

Properties sold faster for the sixth consecutive month in June, highlighting the fact that inventory is still lagging relative to demand. The median time on market for all homes was 44 days in June, down from 47 days in May. It was 37 days on market in June 2013. Short sales were on the market for a median of 120 days in June, while foreclosures sold in 54 days and non-distressed homes typically took 42 days. Some 42% of homes sold in June were on…