Sales of previously owned homes in the United States surged in May to their fastest pace this year, signaling a rebound in the housing market despite rising mortgage rates. The National Association of Realtors (NAR) reported that existing home sales rose 3.2 percent from April to a seasonally adjusted annual rate of 4.17 million units, marking the highest monthly level since December. Compared with May 2022, sales also increased by 3.2 percent.

The boost in home sales was uneven across regions. The Midwest, South, and West all saw gains in annual sales, while the Northeast experienced a decline, according to the NAR data. The May sales figure surpassed economists’ expectations, which had projected an annual rate of roughly 4.07 million units.

Despite the improvement, overall home sales remain below the historic average, which is about 5.2 million annually, after hovering near 4 million units throughout most of 2023. Mortgage rates have generally trended upward this spring but remain lower than they were a year ago, a factor that has supported housing demand.

Home prices continued their steady climb as well. The median sales price for existing homes hit $429,300 in May, up 1.3 percent from the same month last year, representing the highest May median price on record since data collection began in 1999. This increase marks 35 consecutive months of year-over-year home price gains.

However, price growth is now trailing income increases in many markets, which, alongside mortgage rates that remain below last year’s levels, is improving housing affordability. Lawrence Yun, chief economist at NAR, noted that this combination is providing momentum to the housing market.

Yun also cautioned that uncertainty remains, particularly regarding oil prices and future mortgage rate movements. He said it is not yet clear whether home sales have fully exited their multi-year slump. Nonetheless, he projected that if average 30-year mortgage rates decline toward 6 percent, the housing sector could see more sustained recovery.