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New Home Construction Must Grow by 50%, Says Realtors' Yun

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Updated from 10:53 a.m. with additional details and commentary.

NEW YORK (TheStreet) -- Existing home sales rose 4.2% in May, more than expected, to the highest level since November 2009.

The National Association of Realtors said Thursday that total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose to a seasonally adjusted 5.18 million in May from 4.97 million in April and is 12.9% above the 4.59 million- unit pace in May 2012.

The national median home price for all home types was $208,000, up 15.4% year-over-year, marking the sixth consecutive month of double-digit gains. The gains were the strongest since October 2005, when home prices jumped by a record 16.6% from a year earlier.

Home prices are soaring as buyers are returning to the market only to find an acute shortage of homes. Existing home sales have been constrained by the fact that many homeowners owe more on their mortgage than their homes are worth and as a result are unable to sell. Meanwhile, construction of new homes, which came to a virtual standstill after the bust, has only slowly begun to pick up again.

"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," NAR economist Lawrence Yun said. "The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth."

Homebuilder stocks were falling Thursday, with ETF SPDR S&P Homebuilders down 3.8%. The iShares Dow Jones US Real Estate was shedding 2.13% .

Total housing inventory at the end of May rose 3.3 percent to 2.22 million 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 inventory crunch has meant that homes listed for sale are flying off the market.The median time on the market for all homes in May was 41 days, down from 46 days in April. Forty five percent of all homes sold in May were on the market for less than a month.

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, according to the report.