U.S. Existing Home Sales (May 2025)

U.S. existing home sales rise modestly in May

• Existing home sales rose 0.8% month-on-month (m/m) to 4.03 million units (annualized) in May, coming in above expectations for 3.95 million units. On a year-over-year basis, sales were down 0.7%.
• Sales in the single-family segment rose 1.1% m/m, while sales in the smaller condo/co-op segment fell 2.7% m/m.
• Activity was mixed on a regional basis. Sales increased by 4.2% m/m in the Northeast, 2.1% m/m in the Midwest, and 1.7% m/m in the South, but fell 5.4% m/m in the West.
• Total housing inventory at the end of May was 1.54 million units, up 6.2% from April and 20.3% from one year ago. Measured at the current sales rate and seasonally adjusting, unsold inventory ticked up to 4.6 months' supply – up from 4.4 months in April. 
• House price growth decelerated in May, with year-on-year gains easing modestly to 1.3% from 1.8% in the month prior. On a seasonally adjusted basis, median home prices fell 0.1% in May, marking the fifth consecutive monthly decline (seasonal adjustment performed by TD Economics).

Key Implications

• The uptick in existing home sales in May was likely in part driven by the sizeable increase in pending home sales – which tend to lead existing sales by 1-2 months typically – recorded in March, but this trend is likely to reverse course moving forward given the drop in pending sales in April. The overall market also remains weak on aggregate, with rising inventory levels and falling prices indicative of softening buyer demand. While these developments provide modest improvements in terms of affordability, elevated mortgage rates remain the most influential factor for overall affordability and with it, existing home sales.
• Mortgage rates have remained just below 7% for the past two months which has remained a constraint on sales activity. Given the restrictive state of monetary policy, interest rates are expected to decline moving forward but at a gradual pace, owing in part to the expected influence of tariff policies on inflation. This is likely to only offer support at the margins to the housing market in 2025, as affordability concerns remain pervasive. 

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