Home sales rebounded more than expected in May after mortgage rates fell slightly in April.
According to the National Association of Realtors, existing home sales rose 3.2% in May from April to a seasonally adjusted annual rate of 4.17 million units. Economists expected an increase of less than 1%. Sales also rose 3.2% from a year earlier, the strongest pace since December.
This figure is based on contract signings, so the contracts were likely signed in April, when mortgage rates fell slightly after the sharp rise in early March due to the war with Iran.
“Improving affordability helps drive this momentum,” Lawrence Yun, Realtors chief economist, said in a news release. “Even as mortgage rates rise compared to earlier in the year, they remain lower than a year ago and essentially in line with long-term historical averages. Income growth is also slightly outpacing housing price growth in most parts of the country.”
Inventory rose 3.3% month over month to 1.55 million units for sale in May, slightly less than 1% higher than a year ago. At the current sales rate, that equates to a 4.5 month supply. Six months are considered to be settled between buyer and seller.
Since supply is still tight, prices continue to rise. The average price of an existing home sold in May was $429,300, a 1.3% increase from a year ago and a record price for the month.
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“Only 1% of all home sales involved a foreclosure or a situation where the sales price could not cover the outstanding mortgage balance. This shows that homeowners are on solid financial footing,” Yun added.
Sales continue to be strongest at the higher end of the market, where there is more supply and buyers are less sensitive to mortgage rates. Sales of homes priced over $1 million were 11% higher than a year ago, while sales of homes priced between $100,000 and $250,000 fell 5%.
First-time buyers returned to the market and accounted for 35% of sales, up from 33% in April and just 30% the year before. Homes stayed on the market an average of 29 days, down from 32 in April, but up from 27 in May 2025. About a quarter of all sales were in cash, down slightly from a year ago.
Correction: Homes stayed on the market an average of 29 days, up from 32 in April. The month was incorrect in a previous version.
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