Sales of previously occupied US homes jumped to their fastest pace since December, marking a sharp turnaround after a slow start to the spring buying season. Existing home sales rose 3.2% in May from the previous month to a seasonally adjusted annual rate of 4.17 million units, the National Association of Realtors said Tuesday. The surge suggests buyers are starting to shake off the multi-year slump that's gripped the housing market since 2022.

The May sales figure topped economists' expectations of roughly 4.07 million and represented a 3.2% increase compared with May last year. Home sales climbed year-over-year in the Midwest, South and West, but fell in the Northeast. The national median sales price increased 1.3% from a year earlier to $429,300, an all-time high for any May on data going back to 1999. Home prices have now risen for 35 consecutive months. There were 1.55 million unsold homes at the end of May, up 3.3% from April and up 0.6% from the previous year, though that's still well short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic. May's inventory translates to a 4.5-month supply at the current sales pace, below the traditional 5- to 6-month supply considered balanced between buyers and sellers.

Lawrence Yun, NAR's chief economist, said that home price growth is now lagging income growth in many areas, and combined with mortgage rates holding below where they were a year ago, "is helping to improve affordability, giving the housing market momentum." But he added a note of caution: "I cannot definitively say if home sales are truly coming out of the slump, because we know that there's still uncertainty related to the oil prices or how the mortgage rates will move." Yun expects home sales will emerge from their multi-year slump if the average rate on a 30-year mortgage drops back closer to 6%. First-time buyers accounted for 35% of home purchases in May, the highest share since June 2020, though still below the historical 40% mark.

The sales bump comes despite mortgage rates trending higher this spring, though they remain below year-ago levels. Homes purchased in May likely went under contract in March and April, when the average rate on a 30-year mortgage ranged from 6% to 6.46%. The average rate stood at 6.48% last week, down from 6.85% a year earlier. The war with Iran has disrupted crude oil tanker passage from the Persian Gulf, driving oil prices sharply higher and pushing up the long-term bond yields that lenders use to price home loans. Ted Rossman, principal analyst at Bankrate, said that without the war-related inflation spike, "the average 30-year fixed mortgage rate could well be in the mid-to-upper 5's." Home sales have been hovering close to a 4-million annual pace since 2023, far short of the historic norm closer to 5.2 million, and 2025 saw sales stuck at a 30-year low.

Buyers who can afford current rates face better conditions than in recent years. Median list prices dropped 2.4% from a year earlier in May, the steepest decline on data going back to 2017, according to Realtor.com cited in the report. The housing market's chronic shortage of inventory—due partly to years of below-average new home construction—has propped up prices even during the sales slump. But with affordability slowly improving and more homes coming to market, the data suggests the years-long freeze may finally be starting to thaw.