WASHINGTON, D.C.: Sales of previously owned homes in the United States rose to their strongest pace of the year in May, signaling renewed activity in the housing market despite elevated mortgage rates and record-high home prices.

Existing home sales increased 3.2 percent from April to a seasonally adjusted annual rate of 4.17 million units, according to data released on June 9 by the National Association of Realtors (NAR). Sales were also up 3.2 percent compared with May 2025.

The result exceeded economists' expectations of roughly 4.07 million annualized sales, according to FactSet.

Sales increased from a year earlier in the Midwest, South, and West, while the Northeast recorded a decline, NAR said.

The housing market has remained subdued in recent years, with existing home sales generally hovering around a 4 million annual pace since 2023, well below the historical average of about 5.2 million.

Even as sales strengthened, home prices continued to climb. The median U.S. home sales price rose 1.3 percent from a year earlier to US$429,300 in May, the highest level ever recorded for May since NAR began tracking the data in 1999.

The increase marked the 35th consecutive month of year-over-year price growth.

Lawrence Yun, chief economist at NAR, said affordability has improved in some areas because income growth has outpaced home-price gains and mortgage rates remain below last year's levels.

"I cannot definitively say if home sales are truly coming out of the slump, because we know that there's still uncertainty related to the oil prices or how the mortgage rates will move," Yun said.

He added that home sales could emerge from their prolonged downturn if the average rate on a 30-year mortgage falls closer to six percent.

The U.S. housing market has struggled since mortgage rates began rising sharply in 2022, following record lows during the pandemic. Existing home sales last year remained near a 30-year low, and activity was largely stagnant through the early months of 2026.

Homes sold in May likely went under contract during March and April, when average mortgage rates ranged from about six percent to 6.46 percent, according to Freddie Mac. The average 30-year fixed mortgage rate stood at 6.48 percent last week, compared with 6.85 percent a year ago.

Analysts say mortgage rates have moved higher in recent months as conflict involving Iran disrupted oil shipments through the Persian Gulf and pushed energy prices higher.

"If not for the war-related spike in inflation, the average 30-year fixed mortgage rate could well be in the mid-to-upper 5's," said Ted Rossman, principal analyst at Bankrate.

First-time buyers accounted for 35 percent of home purchases in May, the highest share since June 2020, according to Yun. Historically, first-time buyers have represented about 40 percent of sales.

Inventory also improved. There were 1.55 million unsold homes on the market at the end of May, up 3.3 percent from April and 0.6 percent from a year earlier. That represents a 4.5-month supply at the current sales pace, still below the five- to six-month supply generally considered a balanced market.