U.S. home sales and new listings both declined from year-earlier levels in May as mortgage rates climbed above 6.5%, a combination that signals continued pressure on the housing market despite modest gains in inventory, according to Zillow’s latest market report.
The report found that sellers pulled back during what is typically the busiest period of the year for new listings, while buyers faced higher borrowing costs that limited affordability. The result was weaker sales activity compared with May 2025, even as available inventory remained above year-earlier levels.
New listings totaled 422,956 nationwide in May, down 4.1% from a year earlier and 0.8% from April. Historically, new listings tend to peak in May or June, making this year’s decline a notable departure from seasonal trends.
Sales activity also lagged. Zillow’s preliminary sales nowcast estimated 341,929 homes sold in May, a 2.9% decline from the same month last year, though sales increased 4.8% from April.
“May housing results were disappointing for those hanging on to hope of a stronger year for sales,” said Mischa Fisher, Zillow’s chief economist. “Inventory is rising, but weekly data suggests it could flatline in the next four weeks.”
Fisher added that an earlier-than-normal inventory peak could signal weaker sales activity during the second half of the year.
The typical U.S. home value reached $368,720 in May, according to Zillow’s Home Value Index. Home values increased 0.6% from April and were 0.8% higher than a year ago.
Higher home prices combined with rising mortgage rates pushed the estimated monthly payment on a typical home purchase to $1,861, assuming a 20% down payment and excluding taxes and insurance. That represented a 1.1% increase from April, although monthly payments remained 3.1% lower than a year earlier.
Inventory continued to grow on an annual basis for the 30th consecutive month, though the pace of expansion slowed significantly. There were approximately 1.36 million homes for sale nationwide in May, up 1% from a year ago and 4.6% higher than in April.
Market competition showed signs of easing but remained relatively firm. Homes spent a median of 18 days on the market before going pending, one day longer than both April and May 2025.
Price reductions became slightly less common. About 23.9% of active listings experienced a price cut in May, down from 25.7% a year earlier. Meanwhile, 28.4% of homes sold above asking price in April, the most recent month available, compared with 30.1% a year earlier.
The rental market continued to post moderate growth. The typical U.S. rent reached $1,951 in May, up 2% from a year earlier and 0.5% from April, according to Zillow’s Observed Rent Index.
At the same time, concessions remained widespread among landlords. Nearly 40% of rental listings on Zillow offered incentives in May, reflecting continued competition for renters despite rising rents.
The latest data suggests the housing market remains constrained by affordability challenges as elevated mortgage rates continue to limit both buyer activity and seller willingness to list properties, even as inventory conditions gradually improve.
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