More home sellers and home sales in May

Well, it could be a shift away from cash buyers. In the last few years, as mortgage rates rose, we saw an increase in the percentage of deals that were done in all cash. So it could be fewer deals overall but more mortgages being used. Or, it could also be just an indication of pent-up demand. There are plenty of folks who have delayed their purchase decisions for several years, and maybe they’re tired of waiting. If that’s the case, that’s a bullish indicator for home sales in the next couple of months.

Though, I confess, I’m not super bullish.

As I’ve said frequently, May and June should show year-over-year home sales gains over 2024. It’d be nice to see that happen. The risk for this market is that mortgage rates could go higher from here. Even as the stock market has rebounded, the bond market has kept rates high.

That affordability problem can’t be denied. Stay tuned for the next few week to see if we can grow home sales over 2024. I think the next couple of weeks will indeed report sales growth.

Let’s dive into the housing data for the first full week of May 2025.

Weekly pending home sales

Home sales ticked up, as expected, this week. We counted 74,000 newly pending home sales for the week. That’s up 4.5% from a week prior and is 2.6% more sales than the same week a year ago.

As I’ve said, look for May and June to see year-over-year gains in home sales from 2024 because sales were very weak last summer.

You can see the sales drop-off in this chart. 2024 is the blue line. See how it dips right as the purple 2025 line crosses now?

Home sales peaked for the calendar year 2024 in early May at just under 78,000 weekly pending home sales. You can see the spike here in blue too. The biggest week last year was 78,000 single-family sales in a week, and that happened right at the beginning of May.

Mortgage rates at that time surged to 7.5%, and homebuyers walked away. So last year, home sales started moving lower. In most years, though, the weekly home sales tend to max out sometime later in June. So this year we still have more room for growth.

There hasn’t been any catastrophic economic news in a few weeks, and mortgage rates have been stable. Rates are not falling, but at least the 30-year fixed rate is under 7% and doesn’t seem to be going much higher for now. So if things stay on this pace, we should expect the next couple of weeks for home sales to climb.

To show growth in home sales for the rest of May, we don’t need a new boom — we just need things not to collapse. Fingers crossed. By the way, condo sales are a lot weaker than single-family, and condo sales are still running well behind 2024 levels.

Inventory

On to the supply side of the equation. There are now 756,000 single-family homes unsold on the market around the country. That’s 33% more than last year at this time and up 1.6% for the week.

That’s not a huge jump for May. There are 11,000 more single-family homes on the market now than a week ago.

Unsold inventory is steadily approaching the old normal levels that we used to have pre-pandemic. There were only 11% more homes unsold on the market at this point in May 2018 than there are now.

In this chart, each line is a year. The purple line for 2025 keeps climbing north to the old levels. The green line is 2018. 2018 was a rising interest rate year, and inventory rose also that year. You can see the green line of 2018 finished with more unsold homes on the market than 2017 or 2019.

Inventory continues to build. Even if sales inch higher, inventory is building faster. That’s keeping a lid on prices. We’ll get to prices in a minute.

New listings

Still on the supply side, we need to look at new listings volume. We finally hit 80,000 new unsold listings. This is a threshold we’ve been talking about for a few weeks.

For several years — since the end of the pandemic boom three years ago — the defining characteristic of this housing market has been how few sellers there are. That’s finally changing. Think about home sales: it’s hard to get 80,000 home sales in a week if there are only 70,000 sellers. We’ve been in a supply-constrained market. But now, pretty definitively, the seller volume is picking up each week, and that’s one thing that enables sales to increase too.

In addition to those 80,000 unsold new listings, there were 15,000 immediate sales. These are new listings that go immediately into contract and don’t add to the active inventory. That’s the fewest immediate sales for early May that we’ve seen since we’ve been tracking. It wasn’t that long ago when there were 30,000 immediate sales in a given week. Now there are only 15,000.

Immediate sales happen in every market — the best homes priced right get offers immediately. But when buyers don’t have urgency, there are fewer bidding wars and fewer immediate sales.

In fact, immediate sales fell off a cliff last year at this time. Immediate sales, remember, are when the homes get listed and go into contract essentially immediately. When demand weakens, immediate sales don’t happen. As those immediate sales fell, so did total sales. So we can gauge the demand shift in May 2024 in both of these metrics.

This is a chart of the new listings and the immediate sales. Each bar is a week. The taller the bar, the more sellers came to market that week. You can see now, at the right end of the chart, there are more new listings each week than there have been in several years.

Home prices

Even though purchase volumes may be inching higher, the supply of homes on the market is moving faster. As a result, the median price of this week’s pending home sales came in at $399,900.

That’s below 2024 for the second week in a row. Now, it’s just a tiny fraction below last year. Prices will cluster around $400,000, so it’s not a surprise that the price is very close to last year.

Still, two weeks in a row where the sales price nationally is slightly below a year prior. You can see that here in the purple line just a hair below the 2024 blue line.

Most years, of course, home prices increase around 5% each year. This is because we have a generally growing economy, a growing population, a little inflation, and we tend to underbuild homes. So the nominal growth in home prices tends to be about 5% annually. A flat year in home prices is pretty unusual.

A down year — when home prices end lower than the year prior — is very unusual.

2025, as of right now, has unchanged home price appreciation averaged nationally compared to 2024. Home prices are flat year over year. Depending on a few variables like mortgage rates and macroeconomic trends, where inventory keeps climbing, home prices could end 2025 lower than 2024.

One interesting note in the home price data is that list prices are appreciating a little faster than pending sales prices. That’s because more expensive homes are taking longer to sell. The median list price is 2% above last year at $460,000. There is a growing disparity between the list and pending sales prices. None of the data shows home price strength, of course.

Price reductions

As we switch to the leading indicators of future sales prices, the percentage of homes on the market with price reductions ticked up by 30 basis points this week to 36.8%.

After a few weeks of stability in this metric, it has recently started climbing again. You can see that the purple line for 2025 remains at the highest level in years, meaning more of the homes on the market now are unsold and have taken a price reduction from the original list price.

You can also see the green line here from 2022. Demand and price conditions were deteriorating rapidly at that time. Each week, a lot more folks were cutting prices. That’s not happening now. Demand is still light. Supply is still climbing. So a fair number of sellers don’t get the offer they want, and they cut their asking price to stimulate demand.

The takeaway from the price reductions data now is that even though we’ll probably report home sales growth in May and June, that’s partly because we have a lot more homes available to buy.

If we actually saw a demand increase, that would translate into fewer price cuts. You can see the demand changes in this trendline very quickly. See it in the blue line last September — it took a significant drop in mortgage rates to get that shift in market demand. We don’t have that now.