Existing home sales rebounded more than expected in May after mortgage rates fell slightly in April.
Existing home sales in May rose 3.2% from April to a seasonally adjusted annual rate of 4.17 million units, according to the National Association of Realtors. Economists had expected growth of less than 1%. Sales also increased by 3.2% from the previous year, the fastest pace since December.
Because this tally is based on closings, the deal was likely signed in April, when mortgage rates had fallen slightly from their spike in early March due to the war with Iran.
“Improving affordability is driving this momentum,” Lawrence Yun, chief economist at Realtors, said in a release. “Although mortgage rates have risen since the start of the year, they are still lower than a year ago and essentially at their long-term historical average. Income growth is also slightly outpacing home price growth in most regions of the country.”
Inventory in May increased 3.3% from the previous month to 1.55 million units, and increased by just under 1% compared to the same month last year. At the current sales pace, it will last 4.5 months. Six months is considered a good balance between buyers and sellers.
Prices continue to rise as supply remains tight. The median price of existing homes sold in May was $429,300, an increase of 1.3% from a year ago and a record high for the month.
“Only 1% of all home sales resulted in foreclosure or a flooded situation where the sale price could not cover the mortgage balance. This shows that homeowners are on solid financial footing,” Yun added.
Sales at the higher end of the market continue to be strong as there is more supply and buyers are less sensitive to mortgage rates. Sales of homes priced over $1 million increased 11% year over year, 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% a year ago. Homes were on the market for an average of 29 days, down from 32 days in April but up from 27 days in May 2025. About a quarter of all sales were cash, down slightly from the previous year.
Correction: Homes were on the market for an average of 29 days, down from 32 days in April. Previous versions listed the month incorrectly.
