May home sales increase very slightly, but prices hit new record

Sales of previously owned homes rose very slightly in May, up 0.8% from April, to a seasonally adjusted, annualized rate of 4.03 million units, according to the National Association of Realtors.

Housing analysts had been predicting a 1% decline. Sales were 0.7% lower than May of last year.

Sales were strongest in the Northeast, up 4.2% month-to-month. They also rose in the Midwest and South, but they fell in the West, down 5.4%. The West is the most expensive region of the country, according to NAR.

This count is based on closings, so contracts were likely signed in March and April. The average rate on the 30-year fixed mortgage was steady in March but then shot higher, over 7% in April.

“The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market,” said Lawrence Yun, NAR’s chief economist, in a release. “If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs.”

A big jump in the supply of homes for sale was likely behind the small gain in sales from April. There were 1.54 million units available at the end of May, an increase of over 20% from May of last year. At the current sales pace, that represents a 4.6-month supply, which is still historically on the light side.

And that is why there is still pressure on prices. The median price of an existing home sold in May was $422,800, up 1.3% year over year. That’s a record high for the month of May.

Demand is still strong relative to supply; consequently, 28% of homes sold above list price, up from last month’s 18% but down slightly from 30% in May 2024.

Sales have been stronger on the higher end of the market, since there is more supply there, but fell in the $1 million-plus range compared with a year ago. The only price range where they rose was in the $750,000 to $1 million range, which saw a relatively small increase of 1%, NAR said.

“The upper end market is showing no difference compared to other price points. For the past 20 months we have seen the upper end outperforming, but that is no longer the case,” Yun said, suggesting it could be the residual effect of the stock market volatility when tariffs were first announced in April.

Homes are taking longer to sell at 27 days versus 24 a year ago. Just 30% of buyers were first timers, down from 31% last year and still quite low, and 27% of all transactions were all-cash, an increase from the year before.