Existing-Home Sales Edge Higher in May Despite Mortgage Rate Pressure

Sales Increase, But Annual Pace Remains Weak

U.S. existing-home sales rose slightly in May, climbing 0.8% month-over-month to a seasonally adjusted annual rate of 4.03 million, according to the National Association of REALTORS® (NAR). While the monthly uptick signals resilience in demand, sales are still down 0.7% compared to May 2024, reflecting the drag of elevated mortgage rates on buyer activity.

NAR Chief Economist Lawrence Yun pointed to high borrowing costs as a key constraint on market turnover, noting that lower mortgage rates could reenergize both buyer and seller participation. Average 30-year fixed rates hovered at 6.81% as of mid-June, slightly down from a year ago, but still historically high enough to deter many potential entrants.

Inventory Rises—A Relief for Tight Supply Conditions?

Inventory saw notable improvement, with total housing stock rising 6.2% from April to 1.54 million units, a 20.3% increase from last year. This equates to a 4.6-month supply, up from 4.4 months in April and 3.8 months in May 2024. While still below pre-pandemic norms, the increase offers some relief for buyers facing tight options.

Median prices, however, continue to push upward. The national median existing-home price rose 1.3% year-over-year to $422,800—a record high for the month of May. This marks the 23rd straight month of annual price gains. Regionally, the Northeast led with a 7.1% price jump to $513,300, while the South posted a slight decline of 0.7% to $367,800.

Mixed Regional and Segment Performance

Sales were regionally uneven. The West posted a 5.4% monthly drop and is now down 6.7% from a year earlier, while the Northeast and Midwest recorded monthly gains of 4.2% and 2.1%, respectively. In segment terms, single-family sales rose 1.1% month-over-month to 3.67 million, while condo/co-op sales fell 2.7% to 360,000 units.

Investor presence increased, with 17% of transactions from investors or second-home buyers—up from 15% in April. First-time buyers accounted for 30% of sales, a dip from 34% the prior month, signaling affordability challenges. Median days on market decreased to 27, from 29 in April, indicating lingering buyer competition.

Market Outlook: Cautious Bullishness Hinges on Mortgage Rates

The modest sales gain and rising inventory suggest tentative recovery potential. However, persistently high mortgage rates and elevated prices cap broader upside. Should borrowing costs ease further, NAR expects improved turnover fueled by strong job growth and healthy household incomes. For now, traders should view the housing market as cautiously bullish—with upside contingent on rate relief.

More Information in our Economic Calendar.