New listings and home sales slipped below year-ago levels in May as rising borrowing costs dampened buyer and seller activity
The US housing market posted a disappointing May, with home sales and new listings both trailing year-ago levels as mortgage rates pushed past 6.5%, according to Zillow's May Market Report.
Home sales totaled approximately 342,000 in May, down 2.9% from a year earlier, though up 4.8% from April on a seasonally adjusted basis.
New for-sale listings declined 4.1% year over year and slipped 0.8% month over month, defying the seasonal pattern in which supply typically peaks in late spring.
"May housing results were disappointing for those hanging on to hope of a stronger year for sales," said Mischa Fisher, chief economist at Zillow.
"Inventory is rising, but weekly data suggests it could flatline in the next four weeks. A June peak for options home shoppers have to choose from would be early on the calendar, possibly foreshadowing slower sales in the second half of the year."
Inventory streak slows
Active inventory extended its unbroken run of annual growth to 30 consecutive months, but the pace narrowed, rising just 1% year over year after months of more robust gains.
Nationwide, approximately 1.36 million homes were listed for sale in May, up 4.6% from April but barely ahead of last-year levels.
The typical US home value edged up 0.6% month over month to $368,720, while the monthly mortgage payment on a typical property, assuming a 20% down payment, climbed to $1,861.
Despite that increase, the figure remains 3.1% lower than a year ago, when the 30-year fixed rate averaged 6.89%, according to Freddie Mac's Primary Mortgage Market Survey.
Read more: Mortgage rates fall from nine-month high — is relief finally here?
Amir Nurani of Left Coast Leaders says borrowers and brokers had been pricing in falling rates, but rising inflation and energy costs are now reversing that outlook, with bond market pressures suggesting rates could move higher and potentially revisit 7%.https://t.co/3keufR20OP
— Mortgage Professional America Magazine (@MPAMagazineUS) June 2, 2026
Rate sensitivity keeps buyers cautious
Originator feedback mirrors Zillow's sobered read of the market.
Nicholas Barta, division president at Security First Financial in the US, told Mortgage Professional America that the reversal in rate momentum has unsettled buyers.
"We were really trending towards some lower interest rates and the housing market, both on the refinance and purchase side, was really picking up," Barta said.
“And [the war] definitely did have an effect. We saw interest rates that were as low as they had been for probably three years go right back to where we were a year ago, maybe even creep above that.”
Competition data reinforced the market's fragile equilibrium. Homes took a median of 18 days to go pending in May, one day longer than a year earlier.
Share of listings with a price cut stood at 23.9%. Rents held firm at $1,951 per month nationally, up 2% year over year, with nearly 40% of rental listings offering a concession.
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