In May, the sales of previously owned homes slightly increased by 0.8% from April, reaching an annualized rate of 4.03 million units, according to the National Association of Realtors (NAR). This minor rise defied analysts’ predictions of a 1% decline but represented a 0.7% decrease compared to May of the previous year. Notably, the Northeast saw the strongest month-to-month sales surge at 4.2%, while the Midwest and South also experienced gains. Meanwhile, the West—a region with the highest housing costs—witnessed a 5.4% decline.
These sales figures reflect closings based on contracts likely signed earlier, as mortgage rates spiked above 7% in April. NAR chief economist Lawrence Yun indicated that high mortgage rates are suppressing sales, suggesting that a decrease in rates could stimulate buyer and seller activity in the housing market later this year. An increase in housing supply, with 1.54 million units available—up over 20% from last May—contributed to the modest sales rise. This equates to a 4.6-month supply of homes, which remains low historically, thereby exerting continued upward pressure on prices. The median price of an existing home in May reached a record high of $422,800, up 1.3% year over year.
The demand for housing remains strong, as evidenced by 28% of homes selling above list price, up from 18% last month but slightly down from 30% last year. However, sales in the luxury market ($1 million-plus) have declined year-over-year, whereas the $750,000 to $1 million range saw a modest 1% increase. Homes are taking longer to sell, averaging 27 days, and the percentage of first-time buyers remains low at 30%.
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