The US housing market continues to show signs of strain, with existing home sales in May 2025 recording their slowest performance for that month in 16 years, according to data released by the National Association of Realtors (NAR).
While monthly sales rose slightly by 0.8% compared to April, they remain 0.7% below levels from a year earlier and well below pre-pandemic norms.
The ongoing slump is primarily driven by a growing affordability gap. Since May 2019, median home prices have surged by 52%, while wage growth has lagged at 30% over the same period. As a result, the typical monthly mortgage payment for a median-priced home has doubled from approximately $1,000 pre-COVID to over $2,000 today, according to NAR Chief Economist Lawrence Yun.
“Sales are very stable, but at a sluggish activity level,” Yun said, adding that current sales volumes are running at only 75% of their pre-pandemic pace.
One notable shift is the rise in housing inventory. At the end of May, there were 1.54 million housing units available — a more than 20% increase from a year ago. Inventory levels have improved in all regions, with the West and South seeing the largest gains.
Despite the boost in supply, price pressures remain. The median sale price for existing homes in May was $422,800 — a 1.3% increase from May 2024 and a record high for the month. Condominiums and co-ops saw a more modest gain of 0.7%, bringing their median price to $371,300.
Year-over-year home price growth across all property types was also 1.3%, marking the slowest pace since June 2023.
With inventory increasing and buyer activity stagnating, signs are emerging of a shift in market dynamics. Real estate platform Redfin estimates there are currently 34% more sellers than buyers nationwide. The imbalance is even more pronounced in the condo segment, where there are reportedly 83% more condo sellers than potential buyers.
Sales have been concentrated in the higher-priced segments. Homes priced between $750,000 and $1 million were the only category to post year-over-year growth in sales. Meanwhile, transactions in the $1 million-plus range declined compared to last year, signaling some cooling at the top of the market.
Regionally, sales rose the most in the Northeast, up 4.2% month-over-month, followed by smaller gains in the Midwest and South. The West, the most expensive region, saw a notable decline of 5.4%.
Many would-be buyers remain on the sidelines due to high mortgage rates — currently above 7% — along with job security concerns, volatile financial markets, and general economic uncertainty.
Homes are also taking longer to sell, with the average time on market rising to 27 days, up from 24 days a year ago. First-time buyers made up just 30% of transactions, slightly down from 31% last year, while 27% of all home sales were completed in cash — up from a year earlier.
The Federal Reserve opted to hold interest rates steady at its most recent meeting but indicated potential cuts later this year. While Fed decisions don’t directly dictate mortgage rates, they can influence borrowing costs broadly.
“If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs,” Yun said.
