Housing market improvements stall compared to 2025 gains 

This year's spring homebuying season is progressing in fits and starts, with May serving as a prime example of a market trying to get back on track.

A spring rise in existing sales: Existing home sales jumped 2.8% from April to May, the highest level since October 2022, according to a new report from Redfin. The National Association of Realtors' May existing home sales report, due out June 9, is also expected to show an uptick.

Overall sales — which include new homes — also climbed at the fastest clip since October 2022, according to Redfin, rising 3.8% month-over-month.

Redfin reported a rise in contracts signed for existing homes in April, a time when mortgage rates briefly dipped as it appeared that the war in the Middle East might have been nearing an end. As peace negotiations stalled in May, rates crept up again and pending sales slowed. Pending sales held relatively steady from April to May — and will likely stay flat in June.

The housing market is suffering not just from a lack of buyers but from a lack of sellers, said Odeta Kushi, deputy chief economist at First American.

"The spring market is improving, but the improvement is modest and below last year's level," Kushi wrote in a June 8 blog post. "The healthiest markets are not just the ones with more listings. They are the ones where more buyers can still reach the price."

Factoring in the 'affordability layer': Kushi highlighted a familiar pattern: Home sales activity tends to be closer to normal in places where new listings have recovered more fully. But even as inventory showed signs of rebounding, activity stayed sluggish amid drops in homebuying power.

"This affordability layer helps explain why more supply does not always translate neatly into more sales," Kushi said.

Mortgage rates drifting up: Buyers are not getting much help from mortgage rates on the affordability front. Mortgage News Daily (MND) estimates that rates have climbed in recent days following the strong jobs report released last week and the resumption of fighting in the Middle East over the weekend. MND pegged the 30-year fixed-rate mortgage at 6.68% on June 8 — up from 6.6% a week earlier.

Overall, sellers still outnumber buyers as demand remains weak — and that's leading to more stale listings. While affordability remains a challenge for the market, Redfin's report indicates that buyers do have strong leverage for homes that must sell now. This leverage combined with improvements in the labor market make "many Americans feel more confident about making a big purchase," wrote Dana Anderson, a data journalist at Redfin.