May 2025 National Market Update

Home Sales Inch Up as Inventory Hits New Highs for May

The U.S. housing market saw a slight uptick in May, with existing-home sales rising 0.8% from April to a seasonally adjusted annual rate of 4.03 million, according to the National Association of REALTORS® (NAR). While sales increased in the Northeast, Midwest, and South, the West experienced a notable decline. Year-over-year, overall sales fell 0.7%, a reflection of continued affordability challenges and high interest rates.

Market Trends and Inventory

Housing inventory reached 1.54 million units in May—up 6.2% from April and 20.3% higher than May 2024. This marks the highest inventory level for the month of May in recent years, bringing the supply of unsold homes to 4.6 months. That’s an improvement over both the 4.4-month supply in April and the 3.8-month supply recorded a year ago.

NAR Chief Economist Lawrence Yun noted, “The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market.” He also emphasized that declining mortgage rates could unlock pent-up demand and boost economic activity nationwide.

Home Prices Continue Climbing

The median existing-home price for all housing types reached $422,800, a 1.3% increase from May 2024. This sets a new record for the month of May and continues a 23-month streak of year-over-year price gains.

• Single-family homes: Median price of $427,800 (+1.3% YoY)

• Condos/co-ops: Median price of $371,300 (+0.7% YoY)

Regional Breakdown

Each region saw different trends in both sales and pricing:

• Northeast: Sales rose 4.2% MoM and YoY, with a median price of $513,300 (+7.1% YoY)

• Midwest: Sales increased 2.1% MoM and 1.0% YoY, with a median price of $326,400 (+3.4% YoY)

• South: Sales ticked up 1.7% MoM but fell 0.5% YoY, with a median price of $367,800 (-0.7% YoY)

• West: Sales dropped 5.4% MoM and 6.7% YoY, while prices remained nearly flat at $633,500 (+0.5% YoY)

Buyer & Seller Activity

Properties sold slightly faster in May, spending a median of 27 days on the market—down from 29 days in April but up from 24 days in May 2024.

• First-time buyers made up 30% of transactions, down from 34% in April

• Cash sales increased to 27%, up from 25% the month prior

• Investor/second-home purchases rose to 17% of total sales

• Distressed sales accounted for 3%, up slightly from 2% in April and May 2024

Mortgage Rates & Financing Trends

The 30-year fixed mortgage rate averaged 6.81% as of June 18—down slightly from the week before and also lower than the 6.87% average seen in June 2024. Rates remain elevated compared to pre-2022 levels, but their recent stability continues to support modest market activity.

Key Takeaways for Buyers & Sellers

For Buyers:
More inventory and relatively stable mortgage rates offer better negotiating power, though affordability remains tight in some regions. Watching rate trends closely in the second half of the year could open up better opportunities.

For Sellers:
The market remains competitive, especially with record-high prices for May. However, buyers are gaining leverage due to increased supply—so pricing and presentation remain crucial to stand out.

As we head into summer, the real estate market continues to show resilience despite rate pressures. Keeping a close eye on mortgage trends and local market activity will be key for making smart decisions in the months ahead.

Krista Freshour

Realtor

865-776-9608

Information provided by National Association of Realtors