The Numbers First

Existing home sales rose 3.2% in May from April to a seasonally adjusted annual rate of 4.17 million units, according to the National Association of Realtors' report released Tuesday, June 9. Economists were expecting less than a 1% gain. Sales were also 3.2% above the same month last year.

The median price for an existing home sold in May came in at $429,300 — a 1.3% year-over-year increase and a record high for the month of May. That's the 35th consecutive month of year-over-year price gains, per HousingWire.

What's Driving It

Lawrence Yun, chief economist for NAR, pointed to mortgage rates pulling back slightly in April after spiking at the start of March. According to CNBC, that spike was tied to the war with Iran. Rates have since crept back up above 6.5%, but they're still lower than they were a year ago.

"Improving affordability is helping drive this momentum," Yun said in his release. "Income gains are also outpacing home price growth by a small margin in most parts of the country."

NAR's Housing Affordability Index backed that up, registering at 105.6 in May — up from 97.5 a year ago. Affordability improved year-over-year in all four regions, with the West seeing the biggest jump at 11.0%, according to HousingWire.

First-Time Buyers Are Back — Sort Of

First-time buyers made up 35% of sales in May, up from 33% in April and 30% in May 2025, according to NAR data reported by HousingWire.

First-timers had been getting squeezed out for years by cash buyers, investors, and move-up purchasers with equity cushions. A three-year climb back toward 35% suggests the entry-level market is breathing again — slightly.

Homes priced between $100,000 and $250,000 saw sales drop 5% year-over-year, according to CNBC. Meanwhile, homes priced above $1 million were up 11%. The recovery is still tilted toward the wealthy.

Inventory: Better, Not Fixed

Inventory rose 3.3% month-over-month in May to 1.55 million units — the highest level since July — and is up slightly from a year ago, according to Anadolu Ajansı. At the current sales pace, that represents a 4.5 months' supply.

Six months is considered a balanced market. Four and a half months is still a seller's market, just less extreme than recent years.

This market has been hovering around a 4 million annual sales pace for roughly three years, per Anadolu Ajansı. One good month doesn't erase that stagnation.

What the Optimists Get Right

Yun framed the broader economic impact clearly: "Increased home sales mean more economic activity — lawn care, furniture purchases, moving services, mortgage originations and other related business activities all get a boost." Housing is a multiplier in the economy. A recovering housing market matters beyond real estate.

Foreclosures also remain near-absent. Only 1% of sales involved foreclosure or underwater situations, Yun noted. Existing homeowners are NOT in financial distress at any scale that would trigger a crash.

The Legitimate Concern Worth Naming

Skeptics have a fair point: the housing market's improvement is almost entirely rate-dependent, and rates are still above 6.5%. If the Federal Reserve tightens again — or if the Iran conflict escalates further and rattles markets — mortgage rates spike back up and this momentum evaporates. The market's "improvement" is largely a relief rally from a temporary dip in rates, not structural reform of the supply problem. Builders aren't putting up enough starter homes. Zoning laws in most metro areas are still strangling supply. A 4.5-month inventory isn't a healthy market; it's just a less sick one.

Affordability improved across all regions year-over-year, first-time buyers are returning, and foreclosure rates are negligible. The foundation is more stable than the pessimists suggest. But the rate-dependency concern is real and the supply problem is structural, not cyclical.

Regional Breakdown

Sales rose month-over-month in the Northeast (+2.2%), Midwest (+6.4%), and South (+2.0%). The Midwest hit an annualized rate of 1 million — the highest since April 2023, per Anadolu Ajansı. The West was flat.

The Midwest saw stronger gains in a region where more affordable inventory exists, drawing buyers in.

Coverage Gaps

Most outlets — CNBC included — led with the headline beat and Yun's optimistic quotes. Fair enough. The split story between luxury sales booming and entry-level sales declining 5% has received minimal attention. The housing market recovering at the top while the bottom contracts is a stratified recovery, not a broad one.

Also largely uncovered: the Iran conflict's impact on mortgage rates in March directly suppressed the spring buying season — and May's gains are partly a catch-up from that artificial shock.

Bottom Line

May's housing data shows genuine improvement. Sales are up, affordability is improving, first-time buyers are re-entering, and homeowners are financially stable. The housing market is thawing — slowly.

But at $429,300 median with rates above 6.5%, this market is still brutally expensive for working Americans. The luxury market is thriving. The starter-home market is still suffocating. One better month doesn't erase three years of stagnation.