On the heels of FHFA reporting a disappointing 0.2% home price appreciation in April (the weakest since Jan 2015), May existing home sales rose, as expected by 1.8% MoM to 5.53mm SAAR - the highest since February 2007. All regions saw median home prices rise MoM (but Northeast -0.1% YoY) but The Midwest stood out with a 6.5% drop in sales. Median home prices jumped to a record $239,700 (up 4.7% YoY) but first time homeowners are disappearing, as NAR's Larry Yun notes a lack of inventory is "pushing prices out of reach for plenty of prospective first-time buyers."

Home Sales at highest since Feb 2007...

FHFA reported a very modest rise in home prices...

But NAR reports median home prices now at record highs...

Surpassing the peak median sales price set last June ($236,300), the median existing-home price for all housing types in May was $239,700, up 4.7 percent from May 2015 ($228,900). May's price increase marks the 51st consecutive month of year-over-year gains.

Total housing inventory at the end of May rose 1.4 percent to 2.15 million existing homes available for sale, but is still 5.7 percent lower than a year ago (2.28 million). Unsold inventory is at a 4.7-month supply at the current sales pace, which is unchanged from April.

Lawrence Yun, NAR chief economist, says existing sales continue to hum along, rising in May for the third consecutive month.

"This spring's sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize," he said.

With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now."

"Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer."

"Existing inventory remains subdued throughout much of the country and continues to lag even last year's deficient amount," adds Yun.

"While new home construction has thankfully crept higher so far this year, there's still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers."

So to translate - new entrants are blocked by crushing unaffordability but exiting homeowners just keep flipping to higher and higher leverage.

Charts: Bloomberg