Home Sales Surge to 5-Month High Powered by Uptick in First-Time Buyers

Sales of existing homes climbed in May to their highest level since December, as affordability gains and rising incomes paved the way for more first-time homebuyers to enter the market.

Existing-home sales rose 3.2% both month over month and year over year to a seasonally adjusted annual rate of 4.17 million, the National Association of Realtors® reported Tuesday.

Compared to April, sales of previously owned homes picked up in the Northeast, Midwest, and the South, but were unchanged in the West. Annually, sales rose in every region except the Northeast, where they declined.

NAR Chief Economist Lawrence Yun says the five-month high in closings—one of the best monthly figure in the past three years—signals strong momentum for both the housing market and the economy as more Americans are on the move.

"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," he says.

Notably, the NAR economist points out that the bump in sales was fueled by first-time buyers, who accounted for 35% of transactions in May, marking the highest share in nearly six years.

Single-family home sales rebounded from April's slump, rising 3.5% month over month to a seasonally adjusted rate of 3.8 million properties, up 3.3% compared to a year ago. Meanwhile, condominium and co-op sales were flat for the month, although they increased 2.8% from May 2025.

As existing-home sales gained momentum, so did the prices, with the median sales price rising 1.3% from a year ago to $429,300—the highest for the month of May.

"The new record-high May home price reflects solid fundamentals for homeowners and ongoing supply constraints," says Yun. "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."

Regionally, the Midwest continued dominating monthly gains with a 6.4% surge from April to an annual rate of 1 million, followed by the South, which saw a more modest monthly gain in sales of 3.2% to 1.96 million. In the Northeast, sales were up 2.2% on a monthly basis but down 8% year over year, with the median price climbing over 4% to $534,900.

"The lack of inventory is hindering sales activity, but it's also boosting prices in the Northeast," Yun said on a call with reporters Tuesday. "So Northeast is experiencing the fastest price appreciation compared to other region, even with lower sales."

In the West there was no change in sales from April, though the region saw an annual increase of 5.6% as the median price dipped 0.7% to $625,900.

Inventory and affordability

National inventory of existing homes grew by 3.3% from April and 0.6% from a year ago to 1.55 million units—well short of the supply Yun says is needed to snap the market's three-year slump.

 "We need to see about 30% boost in inventory, I would say, to really loosen up the market," says the economist.

Meanwhile, months of supply remained flat at 4.5 month-over-month and down slightly from 4.6 a year ago, suggesting that the market remains relatively balanced.

Housing affordability continued making strides in May, with the West leading the way (+11%), followed by the South (+8.4%), with the Midwest and Northeast lagging at +6.6% and +5.1%, respectively.

Speaking to reporters, Yun pointed out that sales of homes prices at $1 million and higher saw the biggest year-over-year growth, which he attributed in part to to stock market gains, while sales under $250,000 retreated—a clear reflection of today's K-shaped economy.

The NAR expert predicts that if mortgage rates were to move back down to 6%, lowering buyers' borrowing costs, home sales would see a meaningful increase.

Spring market shows its resilience

Realtor.com® chief economist Danielle Hale argues that other indicators point to more stability in the housing market than would normally be expected given that mortgage rates are still in the mid-6% range, inflation continues to eat into household budgets despite more robust hiring, and the Iran-U.S. conflict that has triggered many of these challenges remains unresolved.

"Today’s sales data suggest that the market remains resilient, and first-time homebuyers were an important part of that resilience," she says.

As anticipated in the Realtor.com 2026 Housing Forecast, home price gains have not outpaced inflation, and in many regions also fall behind income growth, helping to modestly boost affordability for buyers. 

The typical U.S. asking price has been softer in 2026, continuing to show annual declines in May, a pattern Hale notes has been consistent throughout the year.

"Data suggest that more modest upfront pricing has been sufficient to motivate sales," according to the chief economist.

The Realtor.com Market Clock reveals that buyers and sellers are facing one of the most fragmented housing markets in years, which means that home shoppers or sellers may face very different local conditions.