Existing home sales rose 3.2% in May to 4.17 million units, according to NAR data, beating earlier estimates and reflecting improved demand since late March as tracked by the Housing Market Tracker. The increase marks a notable uptick after months of sluggish activity, driven by easing mortgage rates and pent-up buyer interest at the start of spring.
Regionally, the gains appear broad-based, though the Housing Market Tracker suggests demand improvements have been building since late March. Inventory reached 1.55 million units, offering buyers more options than earlier in the year, but supply remains tight historically. The median existing home price climbed 1.3% to $429,300, underscoring persistent affordability challenges despite the sales rebound.
Mortgage rates have drifted lower from late 2023 peaks, nudging some sidelined buyers back into the market. However, with the median price rising to $429,300, monthly payments for a typical home remain elevated, stretching budgets even with rate improvements—borrowing costs still hover near 7% for a 30-year fixed loan, limiting purchasing power for many households.
For buyers, the inventory increase to 1.55 million units provides modest relief, though days on market remain compressed in competitive metros. Sellers are gaining leverage in some regions as demand picks up, but the inventory gain suggests a gradual shift toward more balanced negotiating conditions. The sales beat hints at resilience, yet the market remains far from pre-pandemic norms.
Economists caution that one month's data doesn't reverse the trend of tight supply and high prices holding back first-time buyers. NAR's chief economist noted sales are still below historical averages, and further rate cuts would be needed to sustain momentum into 2025. Policy moves on zoning or rate adjustments could reshape the outlook, but for now, the spring market shows cautious optimism.