Existing U.S. home sales improved in May and remain solidly above a year ago, while the median price continued to rise by double-digit rates from a year earlier, according to the National Association of Realtors.

Total existing-home sales rose to a seasonally adjusted annual rate of 5.18 million in May, up 4.2 percent from 4.97 million in April, and 12.9 percent above the 4.59 million-unit pace in May 2012.

Lawrence Yun, NAR chief economist, said the recovery is strengthening and to expect limited housing supplies for the balance of the year in much of the country. 

"The housing numbers are overwhelmingly positive.  However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent. The home price growth is too fast and only additional supply from new homebuilding can moderate future price growth," Yun said in a statement. 

Existing-home sales are at the highest level since November 2009 when the market jumped to 5.44 million as buyers took advantage of tax stimulus.  Sales have stayed above year-ago levels for 23 months, while the national median price shows 15 consecutive months of year-over-year increases.

Total housing inventory at the end of May rose 3.3 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, down from 5.2 months in April.  Listed inventory is 10.1 percent below a year ago, when there was a 6.5-month supply.

The national median existing-home price for all housing types was $208,000 in May, up 15.4 percent from May 2012.  This marks six straight months of double-digit increases and is the strongest price gain since October 2005, which jumped a record 16.6 percent from a year earlier.  The last time there were 15 consecutive months of year-over-year price increases was from March 2005 to May 2006.

Distressed homes – foreclosures and short sales – accounted for 18 percent of May sales, unchanged from April, but matching the lowest share since monthly tracking began in October 2008; they were 25 percent in May 2012.  Fewer distressed homes, which generally sell at a discount, account for some of the price gain.

Eleven percent of May sales were foreclosures, and 7 percent were short sales.  Foreclosures sold for an average discount of 15 percent below market value in May, while short sales were discounted 12 percent.

The median time on market for all homes was 41 days in May, down from 46 days in April, and is 43 percent faster than the 72 days on market in May 2012.  Short sales were on the market for a median of 79 days, while foreclosures typically sold in 43 days and non-distressed homes took 39 days.

Forty-five percent of all homes sold in May were on the market for less than a month.  The median time on the market is the shortest since monthly tracking began in May 2011; on an annual basis, a separate NAR survey of home buyers and sellers shows the shortest selling time was 4 weeks in both 2004 and 2005.

First-time buyers accounted for 28 percent of purchases in May, compared with 29 percent in April and 34 percent in May 2012.

All-cash sales were at 33 percent of transactions in May, up from 32 percent in April and 28 percent in May 2012.  Individual investors, who account for many cash sales, purchased 18 percent of homes in May; they were 19 percent in April and 17 percent in May 2012.