Existing home sales rose nicely last month, according to data put out a little earlier this morning by the National Association of Realtors (NAR), a real estate trade group.

In all, this housing category showed an increase of 4.9% in May, with annualized sales climbing to a seasonally adjusted annual rate of 4.89 million homes, according to the NAR. Expectations had been for a gain to 4.75 million homes. It should be noted that the April estimate of homes sold was revised up slightly from 4.65 million units to 4.66 million.

Also, in some good news for this market, the median sales price of a used home nationally rose to $213,400 in May, up 5.1% from the same time one year earlier. Also, May's inventory of unsold homes came to a supply of 5.6 months. That is still a tad below normal, as a typical supply is about six months. The relatively low rate of inventories is healthy for pricing, and compares rather favorable with supplies of upwards of one year, which had been the case at the depths of the long housing down cycle of several years ago.

Meanwhile, even though May did experience an increase in housing volume on a month-to-month basis, the pace of sales was still off by about 5% from a year before, with demand hurt by affordability issues, reflecting the rise in mortgage rates from last year's lows. Even here, however, we have had some pullback in recent months. However, the aggregate improvement in business activity of late signals that mortgage rates could well start to rise again before too much longer. That could introduce new affordability concerns for many potential buyers.

Breaking the report down by region, we find that all four sectors of the country saw gains last month; also, sales of distressed homes, that is foreclosures and short sales, which had climbed to about a third of overall volume at the trough of the down cycle, accounted for just 11% of May sales, down from 18% in May of 2013. Such sales are typically made at a large discount to conventional sales--at times upwards of 20%. Thus, the declining share of distressed properties in the overall mix helped to boost the averages selling price last month.

Looked at as a whole, this was a reassuring report, and, as indicated, was somewhat better than forecast. Tomorrow, in addition to a report on consumer confidence from the Conference Board, the U.S. Commerce Department will be reporting on sales of new homes in April. This is a much smaller and more volatile housing category than housing resales, and one that, too, figures to show an increase in May over April.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.