Housing Market Reality Check: How To Navigate Rising Inflation, 6.52% Rates, and Record Home Equity

It has been a turbulent week for the broader economy—inflation reached a three-year high, tensions in the Middle East continued to fluctuate, and mortgage rates ticked up to 6.52%.

Yet, beneath the macroeconomic noise, the housing market is flashing a notable bright spot, with home sales climbing to their strongest pace of the year and household real estate wealth reaching an all-time high.

The week's most significant economic release was the consumer price index, which showed inflation rising 4.2% in the year ending in May—a three-year high. The CPI measures how rising prices affect consumers based on typical spending patterns.

Core inflation, which excludes volatile energy prices, also increased over the past year, though its month-to-month gain was more moderate. Because core inflation strips out the direct impact of Middle East–related oil price shocks, it serves as a useful gauge of how broadly price pressures are spreading through the economy. This month's reading offered a more reassuring picture than last month's, though it is not a clean bill of health.

"Although inflation contagion is not yet deepening, it remains the most important thing to watch," notes Realtor.com® senior economist Jake Krimmel.

The inflation backdrop also means that consumers are feeling a real squeeze. Even as take-home pay continues to rise, inflation is eroding purchasing power—pressuring households to either cut spending or draw down savings.

Mortgage rates edge higher

With inflation climbing and the jobs market demonstrating continued resilience, mortgage rates moved modestly higher, rising 4 basis points to 6.52% for the week, according to the latest Freddie Mac data.

While that represents a small step back, rates are still below where they stood at this point last year—a meaningful silver lining for both buyers and sellers, who appear to be absorbing the uptick without pulling back significantly from the market.

Realtor.com economists Anthony Smith and Jiayi Xu discuss this in more detail in our latest weekly mortgage rate update video.

Home sales climb to their highest pace of the year

Perhaps the most encouraging headline of the week: Existing-home sales rose to 4.17 million in May, the strongest reading of the year and 3.2% above May of last year.

First-time homebuyers—a group that has faced persistent barriers to entry—made up a larger share of sales in May compared to both the prior month and prior year. While the market remains competitive, this is a meaningful sign of progress for determined buyers working their way in.

Home sale prices continued to increase, but their 1.3% gain did not outpace inflation or recent wage growth—a development that is gradually improving affordability conditions.

The local picture: Northeast and Midwest lead competitive markets

As always, housing is local. The Realtor.com May Hottest Housing Markets report, written by senior economist Hannah Jones, reflects familiar regional patterns, with markets in the Northeast and Midwest continuing to rank among the most competitive in the country.

Nationally, weekly housing data shows a market in a holding pattern.

Asking prices remain modestly softer than a year ago, suggesting sellers may be slightly more motivated than last year. Active listings are still running ahead of year-ago levels, though that gap is narrowing as homes are spending roughly the same amount of time on the market as they did a year ago. New listing activity—a closely watched leading indicator—remains uneven, tracking broadly in line with the prior year on a cumulative basis.

Household real estate wealth hits a record $48.7 trillion

Even as asking prices softened, sales prices continued to rise, helping push the total value of household real estate to a new record of $48.7 trillion in the first quarter of 2026, according to Federal Reserve data. After accounting for mortgage debt, an estimated $34.9 trillion in equity remains—a substantial contributor to household wealth across the country.

The Realtor.com Generational Wealth research underscores that homeownership doesn't just build individual wealth—it also creates financial advantages that carry forward across generations.

Luxury market pandemic-era gains are holding unevenly

A new monthly look at the high-end housing market, written by Smith, finds that luxury listing prices are softening nationwide, but not uniformly.

On average, high-end homes have retained 59% of their COVID-19 pandemic-era price gains. In Minneapolis and Boise, luxury homes have actually exceeded their pandemic-era highs, while five other markets have retained more than 80% of their run-up.

From list price to sale price

Finally, Realtor.com senior economist Joel Berner examined how sale prices relate to list prices across different market conditions, seasons, property types, and regions. As of March, the typical home sold for 99% of its final list price and nearly 97% of its initial asking price.

Homes in the South are more likely than those in other regions to close below asking price—a pattern that has held relatively consistently—while homes in the West have shown the greatest variation between asking and final sale prices over the past six years.