SEATTLE, WA — Improved inventory and a more stable economic landscape contributed to a rise in home sales in May, marking a positive shift in the housing market. According to Zillow’s latest market report, newly pending sales increased by 3.5% compared to April and edged 0.9% higher than the same month last year.
Buyers benefited from more available homes, with listings reaching 1.3 million, the highest level since July 2020. However, affordability challenges persist, keeping sales below historical norms.
“Home buyers today have a few factors in their favor: Rates are lower than last year, they have more homes to choose from, and sellers are cutting prices at record rates,” said Kara Ng, Zillow senior economist. “But they still face major obstacles, particularly saving up enough for a down payment and finding a home within their budget. Many families looking to upsize are realizing it’s cheaper to rent a starter home than to buy one.”
Economic uncertainty earlier in the year, fuelled by trade tariffs and stock market losses, slowed April’s home sales. But a rebound in the S&P 500 and an easing of tariff concerns helped turn the market around in May. Inventory gains played a critical role, with nearly 20% more homes available than the previous year, reducing buyer competition to the lowest levels Zillow has recorded for May since 2018.
Sellers have begun to adjust to this new reality, with price cuts on nearly 26% of listings nationwide, a May record according to Zillow. Home values declined in 22 of the 50 largest metro areas, and sellers are seeing homes sit on the market longer, with the typical sale taking 17 days. While this remains faster than pre-pandemic norms, it reflects a cooling in what was formerly an overheated market.
Despite less competitive conditions, affordability pressures still weigh heavily on buyers. The report notes that renting a starter home is often cheaper than buying, with the typical monthly rent for single-family homes approximately $100 less than mortgage payments, even after factoring in a 10% down payment. Six years ago, buying was significantly more cost-effective, but shifting dynamics have narrowed the gap.
Zillow forecasts that single-family rents will outpace home value growth in the coming year, even as rent growth moderates compared to pandemic highs. This continued rental demand highlights the affordability struggles that limit many families’ ability to enter the market, despite improved buying conditions.
The report underscores a complex housing environment, where easing market pressures provide opportunities for some while persistent cost challenges keep others on the sidelines.
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