Existing-home sales rose 3.2% in May to a seasonally adjusted annual rate of 4.17M units, the strongest monthly performance since December, according to the National Association of Realtors.

Economists had forecast just 0.7% growth for the month, according to The Wall Street Journal, making the actual result a substantial beat.

The May closings trace to contracts signed in April, when mortgage rates eased from a sharp spike tied to the Iran conflict earlier this year, per CNBC.

The average 30-year fixed mortgage came in at 6.44% in May, up from 6.33% in April but still below the 6.82% recorded a year prior, per the NAR report.

"Income gains are also outpacing home price growth by a small margin in most parts of the country," said Lawrence Yun, NAR's chief economist, citing improving affordability as the key driver of momentum.

The national median existing-home price reached $429,300 in May, up 1.3% year-over-year and a record high for any May on record.

The Housing Affordability Index climbed to 105.6, up from 97.5 a year earlier, with the West posting the sharpest regional improvement at 11.0% year-over-year.

First-Time Buyers Are Back

First-time buyers made up 35% of May transactions, rising from 30% a year earlier, a sign that improving affordability is pulling in buyers who had previously been priced out.

Luxury held up strongest: homes priced above $1M posted 11% year-over-year sales growth, while the $100K-$250K segment fell 5%, per CNBC.

Inventory climbed 3.3% from April to 1.55M units, equating to a 4.5-month supply, still below the six-month level considered a balanced market.

Homes sat on the market for a median 29 days, down from 32 days in April.

The Road Back Is Still Bumpy

Despite the May surge, existing-home sales in the first five months of 2026 are up just 0.7% against the same period in 2025, per The Wall Street Journal.

Redfin's chief economist Daryl Fairweather pointed to volatile mortgage rates as the main reason pent-up buyer demand hasn't fully translated into transactions.

Mortgage rates moved back up in May and rose further after a stronger-than-expected jobs report fueled expectations that the Federal Reserve could raise short-term rates, per The Wall Street Journal.

Yun said that a return to near 6% mortgage rates could pull the market out of what he described as a three-year slump.

For affordability to return to long-term average levels, rates would need to fall below 5%, prices would need to drop 16%, or incomes would need to rise 19%, according to an Intercontinental Exchange analysis cited by The Wall Street Journal.

One month of outperformance is a start, but the housing market's recovery depends on rate stability that hasn't arrived yet.