Existing home sales rose in May, but momentum may not last 

Existing home sales perked up last month, but there are signs that this may represent more of a temporary blip for the housing market than a trend with real momentum.

Highest pace of sales this year: May sales were up 3.2% month-over-month and year-over-year, according to the National Association of Realtors. The May annualized rate of existing home sales was 4.17 million, the highest pace since December 2025 and the highest pace for the month of May since 2023.

May home sale closings resulted from contracts that were signed in March and April, when mortgage rates dipped as it appeared that the war in the Middle East might be ending. But in May and early June, pending sales and new listings slowed as mortgage rates resumed climbing — an indication that existing home sales may slow in the coming months.

"The recent pace of sales likely represents a near-term ceiling rather than the start of an uptrend given the latest backup in mortgage rates," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Demand is lurking: While the latest data indicates existing home sales may stay sluggish in the short term, the May total shows that demand is there if market conditions — particularly mortgage rates — improve.

"Today's sales data suggest that the market remains resilient, and first-time homebuyers were an important part of that resilience," said Realtor.com Chief Economist Danielle Hale, who noted that NAR's report found 35% of existing home sales in May were to first-time buyers, up from 30% a year ago.

But NAR's latest data points to a split housing market rather than a broad recovery, according to Coldwell Banker Realty President and CEO Kamini Lane. "Two groups of buyers are navigating very different markets: those for whom rates are a factor but not the deciding one, and those who are waiting for rates to fall before they can make a move," Lane said.

Inventory, home prices still rising: Housing inventory continues to improve, albeit at a slower pace. NAR estimated that there were 1.55 million units available in May, up 3.3% from April and up 0.6% year-over-year. That put the supply of unsold inventory at 4.5 months, similar to April and down slightly from a year ago.

Meanwhile, the national median price for an existing home was $429,300 last month, up 1.3% from a year ago and the 35th consecutive month of year-over-year increases. The regional differences, however, are wide. The Northeast saw prices rise 4.2% year-over-year, while the median price in the Midwest was up 2.8% and up 1.1% in the South. The West posted the only regional decline, with prices down 0.7% compared to May 2025.

Even so, home price increases remain below the pace of wage growth in most markets, according to NAR Chief Economist Lawrence Yun. This, he said, is helping improve affordability even as mortgage rates remain elevated.