May Sees Modest Gains in Home Sales as Wages Outpace Prices
The U.S. housing market showed signs of life in May, with pending home sales increasing by 1.8% month-over-month and 1.1% year-over-year, according to the latest report from the National Association of Realtors (NAR). This uptick suggests a gradual improvement in buyer activity, driven in part by a strong job market.
All four major U.S. regions experienced an increase in contract signings from April to May, with the West leading the way with a notable 6.0% surge. On a year-over-year basis, the Midwest and South saw gains in pending sales, while the Northeast and West recorded decreases.
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Lawrence Yun, NAR Chief Economist, pointed to consistent job gains and rising wages as contributing factors to the modest recovery. “Hourly wages are increasing faster than home prices,” Yun stated, “However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.”
This highlights the continued sensitivity of the market to interest rate movements.
Regional disparities in housing market dynamics were also evident. Yun noted that the Northeast’s persistent housing shortage is pushing up prices, with over a quarter of homes in the region selling above their list price.
Conversely, the South’s greater inventory is providing buyers with more negotiation power. While price declines in the South were observed, Yun considers them temporary given the region’s robust job creation.
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May 2025 National Snapshot:
- Month-over-month increase: 1.8%
- Year-over-year increase: 1.1%
May 2025 Regional Snapshot:
- Northeast:
- Month-over-month increase: 2.1%
- Year-over-year decrease: 0.5%
- Midwest:
- Month-over-month increase: 0.3%
- Year-over-year increase: 2.6%
- South:
- Month-over-month increase: 1.0%
- Year-over-year increase: 2.0%
- West:
- Month-over-month increase: 6.0%
- Year-over-year decrease: 1.2%
The Pending Home Sales Index (PHSI), a forward-looking indicator based on home-contract signings, serves as the basis for these figures. An index of 100 signifies the level of contract activity observed in 2001.
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