WASHINGTON, DC—For-sale apartments, including condominiums and cooperatives, led the way as existing-home sales increased last month to their fastest pace since before the downturn, the National Association of Realtors said Wednesday. Sales of condos and co-ops rose 6.6% in June from May's annualized rate of 610,000 units. That's up 8.3% from a year ago and the highest pace since the annualized 680,000 units recorded in May 2007.

Total existing-home sales, which also include single-family homes and townhouses, increased 3.2% to a seasonally adjusted annual rate of 5.49 million in June from a downwardly revised 5.32 million in May. Sales are now at their highest pace since February '07. Single-family homes lagged multifamily, rising 2.8% over the previous month, although the median sales price for existing single-family homes rose faster on a year-over-year basis than that of condos.

“Buyers have come back in force, leading to the strongest past two months in sales since early '07,” says Lawrence Yun, chief economist at NAR. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy.”

Inventories of unsold properties, which were already tight in May, tightened further to a five-month supply in June. Overall, inventories ticked upward by 0.9% to 2.3 million homes from 2.28 million in May.

'Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,” Yun says. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.”

An article in Wednesday's Wall Street Journal reflected some of Yun's concerns. The WSJ story noted that condo development has been “slammed by tough rules on condo mortgages enacted after the housing bust as well as stronger demand among young people for rentals and tight lending conditions for builders.”

Calling NAR's figures “a solid report,” Stephanie Karol and Kristin Reynolds, US economists with IHS Global Insight, point to “a gap” between the median monthly rental payment and the median mortgage payment as indicated in the Census Bureau's Homeownership and Vacancies report for the first quarter. That is to say, rentals are more expensive.

“This suggests the presence of substantial barriers preventing current renters from becoming owners,” according to Karol and Reynolds. “Some of these obstacles (e.g. low credit scores) are burning the housing market at both ends: keeping current owners from adding to inventory while keeping current renters from becoming buyers.” Nonetheless, they expect annualized existing home sales to surpass an annualized 5.5 million by the end of the year.