US home sales rise in May despite higher mortgage rates
National Association of Realtors data shows strongest performance in three years, though chief economist warns uncertainty remains
Existing home sales in the United States increased by 3.2% in May compared to the previous year, reaching a seasonally adjusted annual rate of 4.17 million, according to data from the National Association of Realtors. Month-on-month sales also rose by 3.2%, marking one of the strongest performances in three years. The increase occurred despite mortgage rates remaining around 6.5% due to geopolitical shocks, including the Iran war, and wage growth lagging behind inflation. Sales rose in all regions except the Northeast, where supply constraints persist.
The National Association of Realtors reported that the figures represent a significant rebound from the deep freeze that has characterised the housing market for the past three years, a period defined by rising mortgage rates and elevated property prices. While the latest data suggests buyers and sellers remain active despite glum economic sentiment, the recovery is not yet uniform across the country.
Lawrence Yun, the National Association of Realtors’ chief economist, cautioned that it is not definitive that the market is emerging from a slump due to ongoing uncertainty surrounding oil prices and mortgage rates. He noted that while sales are improving, with year-to-date figures tracking approximately 0.7% ahead of last year’s pace, significant challenges to a full recovery remain.
Mortgage rates have remained stuck around 6.5%, a level attributed to geopolitical shocks including the Iran war and lingering inflation risks. Although the labour market is holding up, wage growth has slipped below inflation, complicating affordability for buyers. Yun suggested that if mortgage rates were to return to 6%, sales would likely rise, though this is not guaranteed given the current economic volatility.
Economists have been hoping that improved inventory, slightly lower mortgage rates, and strong wage growth would help bring wary buyers back into the market this year. However, the interplay between mortgage costs and property valuations remains a critical factor for the trajectory of the US real estate sector in the coming quarters.
