‘Great news for the housing market’ as home sales jump to 2026 highs despite rate challenges
Existing-home sales rose sharply in May, snapping a spring selling season that had been defined more by caution than conviction. Buyers came off the sidelines despite mortgage rates that ticked higher from where they stood earlier in the year.
Sales climbed 3.2% month over month and 3.2% year over year to a seasonally adjusted annual rate of 4.17 million, according to data released Tuesday by the National Association of Realtors (NAR). That puts transactions at their highest level since December 2025. For mortgage brokers, it's a more encouraging number than April's, when sales managed just a 0.2% gain.
The rebound came alongside a record median home price of $429,300 for May, up 1.3% from a year earlier. The streak of consecutive year-over-year price increases extended to 35 months. NAR chief economist Dr. Lawrence Yun credited improving buyer conditions for the jump.
"More Americans are on the move, with home sales rising to the highest level since December," Yun said. "This is great news for the housing market and the economy. Improving affordability is helping drive this momentum. 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. Income gains are also outpacing home price growth by a small margin in most parts of the country."
Affordability and momentum
The average 30-year fixed-rate mortgage in May was 6.44%, according to Freddie Mac, up from 6.33% in April but down from 6.82% a year ago. Affordability improved year over year in all four regions, led by the West at 11.0%, the South at 8.4%, the Midwest at 6.6%, and the Northeast at 5.1%. The Housing Affordability Index came in at 105.6, up from 97.5 a year ago.
First-time homebuyers made up 35% of sales, up from 33% in April and 30% a year ago. That's a cohort that has struggled against pricing and rate pressures, and the uptick is worth watching for originators building their purchase pipelines. The median time on market fell to 29 days from 32 days in April, though it was up slightly from 27 days in May 2025.
Cash sales held at 25% for the second consecutive month, while investor and second-home activity dropped to 14% from 16% in April. Distressed sales fell to just 1% of transactions, down from 2% in April and 3% a year ago.
Yun pointed to those numbers as a sign the market is on a sounder footing than the affordability headlines often suggest.
"The new record-high May home price reflects solid fundamentals for homeowners and ongoing supply constraints," he said. "Only 1% of all home sales involved a foreclosure or an underwater situation in which the sale price could not cover the outstanding mortgage balance. This shows that homeowners are on solid financial footing."
Regional picture and inventory
The Midwest led all regions with a 6.4% monthly gain, reaching an annual rate of 1.0 million. The South rose 3.2% to 1.96 million and remains the country's most active market by volume, with year-over-year sales up 5.9%. The Northeast added 2.2% for the month but is still down 8.0% from May 2025. The West held flat at 750,000 but posted a 5.6% year-over-year gain.
Inventory edged up 3.3% from April to 1.55 million units, or 4.5 months of supply. A year ago it stood at 4.6 months. The gains have been slow, and available supply remains well short of what a normalized market would carry.
Yun tied the sales rebound to ripple effects well beyond the closing table.
"Increased home sales mean more economic activity — lawn care, furniture purchases, moving services, mortgage originations, and other related business activities all get a boost," he said.
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