Home Sales Improve Slightly in May, but High Mortgage Rates Remain a Hurdle for the Housing Market
The US housing market received a small boost in May, with existing home sales improving slightly, according to the National Association of Realtors (NAR). Sales of previously owned homes rose 0.8% from the previous month to a seasonally adjusted annual rate of 4.03 million. This was higher than economists' expectations of a 1.3% drop to a rate of 3.95 million homes.
Despite the slight increase, sales are still down 0.7% compared to a year ago. The housing market has been struggling with high mortgage rates and growing economic uncertainty, but the slight improvement in sales is a positive sign.
The relatively subdued sales are largely due to persistently high mortgage rates, according to NAR chief economist Lawrence Yun. Lower interest rates will attract more buyers and sellers to the housing market. Mortgage rates have held steady in recent months at around 6.8%, and home prices remain near all-time highs, leaving many prospective buyers struggling with affordability.
Despite the high prices, buyers do have more homes to choose from this spring. As of May, housing inventory stood at 1.54 million, up 6.2% from a month earlier and 20% from a year ago. Sales were strongest in the more competitive and supply-constrained Northeast and Midwest regions, with existing home sales up 4.2% from April and 4.2% from a year earlier in the Northeast, and a month-over-month gain of 2.1% and 1% growth from 2024 in the Midwest.
In the South, existing home sales rose 1.7% from a month earlier, while they declined 5.4% in the West.
If you're considering buying a home this spring, it's important to keep in mind that the housing market is still facing challenges. However, with more homes available and potential for lower interest rates in the future, now could be a good time to start your search.
