The U.S. housing market gained some momentum in May 2026, with existing-home sales rising to their strongest pace since the start of the year as improving affordability, steady wage growth, and moderating mortgage costs encouraged more buyers to reenter the market.
Sales of previously owned homes increased 3.2% from April 2026 and were also 3.2% higher than a year earlier, reaching a seasonally adjusted annual rate of 4.17 million units, according to new data released by the National Association of Realtors.
The gains suggest that the housing market is beginning to regain traction after several years of elevated borrowing costs and limited inventory weighed on transaction activity. While mortgage rates moved slightly higher during May, they remained below year-ago levels, helping support buyer demand.
“More Americans are on the move, with home sales rising to the highest level since December,” said NAR Chief Economist Lawrence Yun. “Improving affordability is helping drive this momentum.”
Housing affordability has improved meaningfully over the past year, aided by income growth that has generally outpaced home-price appreciation. NAR’s Housing Affordability Index rose to 105.6 in May from 97.5 a year earlier, indicating that the typical family now has slightly more purchasing power than in 2025.
The increase in sales occurred despite continued supply constraints. Inventory at the end of May totaled 1.55 million homes, up 3.3% from April but only marginally higher than a year ago. At the current sales pace, that represents a 4.5-month supply of homes on the market, unchanged from April and still below levels typically associated with a balanced market.
Limited inventory continues to place upward pressure on prices. The national median existing-home price reached a record $429,300 in May, up 1.3% from a year earlier and marking the 35th consecutive month of annual price gains.
Despite affordability challenges in many markets, homeowner balance sheets remain exceptionally healthy. Distressed sales, including foreclosures and short sales, accounted for just 1% of all transactions in May, underscoring the strong equity position held by most homeowners.
The sales rebound was broad-based across much of the country. The Midwest posted the strongest monthly gain, with transactions jumping 6.4%, while the South–the nation’s largest housing market–recorded a 3.2% increase. Sales also advanced in the Northeast. Activity in the West was unchanged from April but remained substantially above year-earlier levels.
The South continued to lead annual growth, with existing-home sales rising 5.9% from May 2025. The West followed with a 5.6% increase, while the Midwest recorded a 2% gain. The Northeast remained the lone region posting an annual decline.
Single-family homes drove most of the national increase. Sales climbed 3.5% from April to an annualized pace of 3.8 million units, while condominium and cooperative sales were essentially unchanged.
The market also showed signs of improving participation among first-time buyers. They accounted for 35% of all transactions in May, up from 30% a year earlier and the highest share in several months. Meanwhile, investor activity continued to moderate, with individual investors and second-home purchasers representing 14% of sales, down from 17% a year ago.
Homes sold more quickly as demand strengthened. Properties remained on the market for a median of 29 days, down from 32 days in April, though slightly longer than the 27-day median recorded a year ago.
The average 30-year fixed mortgage rate stood at 6.44% during May, according to Freddie Mac, up modestly from April but well below the 6.82% average recorded a year earlier. That decline in financing costs, combined with rising incomes, has helped offset some of the affordability pressures created by elevated home prices.
Economists note that a sustained increase in home sales could provide a broader lift to the economy, supporting activity ranging from mortgage lending and moving services to furniture purchases and home improvement spending.
While inventory shortages remain a key challenge, May’s sales data suggest that buyers are gradually adapting to the higher-rate environment and that the housing market may be entering a more stable phase of recovery after several years of subdued activity.
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