U.S. Housing Market May 2025: Existing-Home Sales Rise 0.8% Amid 16-Year Low for May Activity and Rising Mortgage Rates

Key Points

• Research suggests home sales rose slightly in May 2025, with existing home sales up 0.8% month-over-month.

• It seems likely that high mortgage rates, averaging 6.82% for a 30-year fixed, are still hurting the market, deterring many buyers.

• The evidence leans toward increased inventory helping sales slightly, but year-over-year sales are down, showing ongoing challenges.

Home Sales in May 2025
Existing home sales increased by 0.8% in May 2025 compared to April, reaching a seasonally adjusted annual rate of 4.03 million, according to the National Association of Realtors

. However, this was a 0.7% decrease from May 2024, indicating broader market struggles.

Impact of High Mortgage Rates
Mortgage rates remained high, averaging around 6.82% for a 30-year fixed mortgage in May 2025, up from April

. The NAR Chief Economist noted that these rates are deterring buyers, contributing to subdued sales despite a slight monthly increase.

Market Context
Inventory rose significantly, up 20.3% year-over-year to 1.54 million units, which may have supported the slight sales uptick. However, high borrowing costs continue to challenge affordability, especially for first-time buyers, with sales down year-over-year.

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Comprehensive Analysis: Home Sales and Mortgage Rates in May 2025

This note provides a detailed examination of the housing market in May 2025, focusing on the slight rise in home sales and the ongoing impact of high mortgage rates. It explores the data, expert commentary, and market dynamics, offering insights for homebuyers, sellers, and analysts.

Context and Market Overview

The US housing market in May 2025 showed a slight improvement in sales, with existing home sales increasing month-over-month, but high mortgage rates continue to pose challenges. The current time is 08:35 AM PDT on Monday, June 23, 2025, and recent reports provide a snapshot of the market's condition.

Home Sales Data

According to the National Association of Realtors (NAR), existing home sales rose by 0.8% in May 2025 compared to April, reaching a seasonally adjusted annual rate (SAAR) of 4.03 million

. This slight increase aligns with the user's statement of a modest rise. However, year-over-year, sales fell by 0.7% from 4.06 million in May 2024, indicating ongoing market challenges. Regional variations show sales increased month-over-month in the Northeast (4.2% to 500,000), Midwest (2.1% to 990,000), and South (1.7% to 1.84 million), but decreased in the West (5.4% to 700,000). Year-over-year, sales were up in the Northeast (4.2%) and Midwest (1.0%), but down in the South (0.5%) and West (6.7%).

For new home sales, data for May 2025 was not readily available in the search results, as the Census Bureau typically releases it around June 23 or 24. However, forecasts suggest a potential decline of less than 10% in new home sales, indicating similar pressures

. Given that existing home sales dominate the market, the focus here is primarily on those figures.

Mortgage Rates and Their Impact

Mortgage rates remained high in May 2025, with the average 30-year fixed mortgage rate increasing to 6.82%, a 9-basis-point rise from April, as reported by Eye on Housing

.

The NAR Chief Economist, Lawrence Yun, stated, "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," highlighting the direct impact

. High rates increase borrowing costs, deterring potential buyers, especially first-time buyers, with only 30% of sales in May being first-time buyers, down from 34% in April and 31% in May 2024. The median time on market was 27 days, up from 24 days year-over-year, suggesting slower sales activity.

Market Dynamics and Inventory

Despite high rates, inventory levels provided some relief. Unsold inventory reached 1.54 million units in May, up 6.2% from April and 20.3% from May 2024, with a 4.6-month supply compared to 4.4 months in April and 3.8 months in May 2024

. However, the median sales price hit a record high for the month at $422,800, up 1.3% from May 2024 ($417,200), the 23rd consecutive month of year-over-year price increases, exacerbating affordability issues.

Comparative Analysis

Historically, high mortgage rates have been a barrier to home sales, as seen in 2022-2023 when rates above 6% led to sales declines. The current situation mirrors this, with the slight month-over-month increase possibly driven by increased inventory, but year-over-year declines showing the persistent impact of high rates. Articles like NPR's note that sales posted the slowest May in 16 years, reinforcing the market's struggle

.

Supporting Data Tables

Below are tables summarizing key data and impacts:

Metric	May 2025	Change from April 2025	Change from May 2024
Existing Home Sales (SAAR, mil)	4.03	+0.8%	-0.7%
Unsold Inventory (mil units)	1.54	+6.2%	+20.3%
Months Supply	4.6	+0.2 months	+0.8 months
Median Sales Price ($000)	422.8	Not specified	+1.3%

Mortgage Rate Data	Value	Notes
Average 30-Year Fixed Rate	6.82%	Monthly average, up 9 bps from Apr
Week of May 8 Rate	6.76%	Starting point
Week of May 29 Rate	6.89%	Ending point, highest since Feb

Conclusion

The evidence suggests that while existing home sales rose slightly by 0.8% month-over-month in May 2025, reaching 4.03 million SAAR, high mortgage rates averaging 6.82% continue to hurt the market, as seen in the 0.7% year-over-year decline and expert commentary. Increased inventory, up 20.3% year-over-year, provided some support, but affordability challenges persist, particularly for first-time buyers, highlighting the ongoing impact of high borrowing costs.

Key Citations

• NAR Existing-Home Sales Report Shows 0.8% Increase in May

• Treasury Yield Increase Drives Mortgage Rates Higher in May

• 30 Year Mortgage Rate Weekly Trends

• May 2025 Monthly Housing Market Trends Report

• Home sales just posted their slowest May in 16 years

• The 2025–2026 Outlook for U.S. New Residential Real Estate

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