Housing News

Existing Home Sales Jumped in May in a Sign the Housing Market Is Finally Picking Up

Last year, many homebuyers sat on the sidelines as high mortgage rates, elevated home prices, and a shortage of properties for sale made it challenging to make it to the closing table.

However, the housing market may finally be showing signs of life.

Existing home sales were up 3.2% year-over-year, according to the latest data from the National Association of Realtors (NAR). Sales also rose 3.2% from April to May. (Existing homes do not include new construction.)

The number of purchases climbed to a seasonally adjusted annual rate of 4.17 million homes, the highest level since December.

“More Americans are on the move, with home sales rising to the highest level since December,” NAR Chief Economist Lawrence Yun said in a statement. “This is great news for the housing market and the economy.”

The uptick in sales is likely at least partially due to it becoming a little more affordable to buy.

“Improving affordability is helping drive this momentum,” said Yun. “Even with mortgage rates ticking up compared to earlier in the year, they remain lower than a year ago and are essentially at the long-term historical average.”

More existing homes are also coming onto the market.

Housing stock rose 3.3% from April to 1.55 million homes in May, according to NAR. That is up slightly from a year ago and gives buyers more options than they had during the frenzied post-pandemic years.

Even so, prices continued to climb.

The median existing home sales price hit a new May record of $429,300. That price tag was up 1.3% from $423,700 a year ago. It marked the 35th consecutive month of annual price increases.

Where home sales rose the most

The South posted the biggest monthly jump in existing home sales, with sales jumping 5.9% year-over-year in May. Median prices ticked up 1.1% to $373,100.

The West also experienced an uptick with sales rising 5.6% from a year ago. Home prices slipped 0.7% annually to a median of $625,900, potentially offering some relief to buyers in previously red-hot markets.

Sales in the Midwest ticked up more modestly by 2% year-over-year in May. Prices increased 2.8% year-over-year to a median of $336,300.

The housing market in the Northeast was more of a mixed picture. May sales rose 2.2% month-over-month but fell 8% compared with last year. Prices, however, surged 4.2% annually to a median of $534,900.

Affordability improved in every region of the country, according to NAR, with the biggest gains in the West, where affordability rose 11% year-over-year.

Buyers in the South saw affordability improve by 8.4%, followed by the Midwest at 6.6%, and the Northeast at 5.1%.

First-time homebuyers are gaining ground

More first-time homebuyers entered the market in May.

About 35% of existing home sales went to first-time buyers, up from 30% a year earlier, according to NAR. Investors and second-home buyers pulled back.

They accounted for 14% of purchases, down from 17% one year ago.

Homes also sold more quickly. Properties spent a median of 29 days on the market in May, down from 32 days in April.

“Today’s sales data suggest that the market remains resilient, and first-time homebuyers were an important part of that resilience,” said Danielle Hale, Realtor.com chief economist in a statement.