Existing Home sales Rise Slightly in May Despite High Mortgage Rates
Washington D.C. – Sales of existing homes in the U.S. experienced a marginal increase in May, climbing 0.8% from April, according to the National Association of Realtors (NAR). This translates to a seasonally adjusted annualized rate of 4.03 million units. While analysts had anticipated a 1% decrease, sales still lagged 0.7% behind May of the previous year.
Regional Performance of Existing Home Sales
The housing market’s performance varied across different regions. The Northeast led the way with a robust 4.2% month-over-month increase. The Midwest and South also saw gains,while the West,the nation’s most expensive region,experienced a meaningful drop of 5.4%.
Did You Know? The Northeast’s strong performance might potentially be attributed to its relatively lower housing costs compared to the West Coast.
Impact of Mortgage Rates on Home Sales
The slight increase in sales reflects closings that likely occurred in March and April. During this period, the average rate on a 30-year fixed mortgage climbed above 7% in April [1]. According to Lawrence Yun, NAR’s chief economist, persistently high mortgage rates are the primary factor holding back the market. He believes that lower interest rates in the latter half of the year could stimulate sales, driven by strong income growth and a healthy job market.
Inventory and Pricing Trends
A significant surge in the supply of homes for sale likely contributed to the modest sales increase. At the end of May, there were 1.54 million units available, marking a more than 20% increase compared to May of the previous year. This translates to a 4.6-month supply at the current sales pace, which is still considered relatively low by past standards.
despite the increase in inventory, prices remain elevated. The median price of an existing home sold in May reached $422,800, a 1.3% increase year-over-year and a record high for the month.
Pro Tip: Keep an eye on inventory levels in your local market. A rising inventory can indicate a cooling market and possibly more negotiating power for buyers.
Market Dynamics and Buyer Behavior
Demand continues to outstrip supply, with 28% of homes selling above list price, up from 18% the previous month but slightly down from 30% in May 2024. Sales have been stronger in the higher end of the market due to greater availability, but sales in the $1 million-plus range have declined compared to last year. The $750,000 to $1 million range saw a modest increase of 1%,according to NAR.
Homes are taking longer to sell,averaging 27 days compared to 24 days a year ago. First-time buyers accounted for just 30% of purchases, down from 31% last year and still relatively low. All-cash transactions represented 27% of all sales, an increase from the previous year.
Key Housing Market Indicators – May 2025
| Indicator | Value | Change (Year-over-Year) |
|---|---|---|
| Existing Home Sales (Annualized Rate) | 4.03 million | -0.7% |
| median Existing Home Price | $422,800 | +1.3% |
| Inventory | 1.54 million units | +20% |
| Homes Sold Above List Price | 28% | Down slightly from 30% |
| Days on Market | 27 days | +3 days |
Understanding the Existing Home Market
The existing home market, also known as the resale market, comprises previously owned properties available for sale. It’s a crucial indicator of overall housing market health, reflecting factors like affordability, consumer confidence, and economic conditions. Unlike new home sales, existing home sales provide a snapshot of established neighborhoods and housing stock.
Frequently Asked Questions About Existing Home Sales
- What are the typical costs associated with buying an existing home?
- Beyond the purchase price, buyers should budget for closing costs (including appraisal, title insurance, and lender fees), property taxes, homeowner’s insurance, and potential repairs or renovations.
- How can I find a reliable real estate agent to help me buy or sell an existing home?
- Seek recommendations from friends,family,or online reviews. Interview several agents to assess their experience, market knowledge, and interaction style.
- What are the advantages of buying an existing home versus new construction?
- Existing homes frequently enough offer established landscaping,mature neighborhoods,and potentially lower prices than new construction.They also provide immediate occupancy, avoiding the construction timeline.
What are your predictions for the housing market in the second half of 2025? How will rising inventory affect home prices in your area?
Share your thoughts and experiences in the comments below!
