After a sluggish spring, the U.S. housing market may finally be showing signs of life. According to new data from the National Association of Realtors (NAR), pending home sales rose unexpectedly in May, climbing 1.8% from April and 1.1% compared to a year earlier. For many market watchers, this surprise uptick offers a rare glimmer of optimism heading into the summer.
Pending sales—agreements signed but not yet closed—are widely seen as a leading indicator for housing activity, usually predicting finalized sales one to two months in advance. The improvement came despite persistent headwinds like elevated mortgage rates and lingering uncertainty around economic policy, particularly tariffs.
The average 30-year fixed mortgage rate in May held at a daunting 6.82%, according to Freddie Mac. And yet, a combination of resilient job growth, moderating inflation fears, and fading tariff anxiety seemed to nudge hesitant buyers back into the market.
“Steady employment gains and rising wages are providing some cushion,” said NAR Chief Economist Lawrence Yun. “Hourly earnings are growing faster than home prices in many areas, which helps. But the real driver remains mortgage rates—they have far more influence over affordability than wages do.”
Regionally, the West saw the biggest jump in pending sales, up 6% from April. The Northeast followed with a 2.1% rise, the South gained 1%, and the Midwest posted a modest 0.3% increase. Compared to last year, the South and Midwest were in positive territory, while the West and Northeast lagged slightly behind.
For Catherine and Ben Howard, a couple from San Diego who had been on the sidelines for over eight months, the recent dip in listing prices was just enough to pull them back in.
“We missed out on a few homes earlier this year because the competition was insane or the price just crept too high,” Catherine said. “Now we’re seeing homes sit a little longer, and some sellers are dropping their prices. It’s not perfect, but it feels more doable.”
Buyers like the Howards are at the heart of this market shift. They’re financially capable and eager to buy, but hyper-sensitive to any change in interest rates. Even a small improvement in affordability—or just a perception that the worst is over—can prompt them to act.
According to Realtor.com senior economist Jake Krimmel, the May rebound could mean that some of those cautious buyers are finally stepping off the sidelines. “But let’s not forget, mortgage rates have been rising steadily all spring, and if the Fed keeps holding its rate, that trend might continue into the summer,” he cautioned.
Indeed, the Federal Reserve has held its benchmark interest rate steady between 4.25% and 4.5% since December. Mortgage rates, in turn, have remained stubbornly above 6.6%, a threshold that many first-time buyers find difficult to clear.
Fed Chair Jerome Powell faced tough questions at a congressional hearing last week, as both Democrats and Republicans pressed him on how current monetary policy is straining housing affordability.
“We see the same thing you do—it’s tough out there,” Powell admitted. “People feel stuck. They don’t want to give up their existing mortgage to take on something significantly more expensive.”
Still, Powell emphasized that the Fed’s priority is to bring inflation back down to its 2% target. With tariff-driven inflation expected to rise over the summer, the Fed has little appetite to loosen policy too soon. “The best thing we can do is bring inflation down and keep it there,” he said.
In the meantime, housing market data continues to be mixed. Existing-home sales fell 0.7% year over year in May, while new-home sales plummeted 6.3%. But that downturn is also beginning to shift pricing behavior—many sellers are becoming more realistic.
“We’re seeing more listings, more price cuts, and longer time on market,” Krimmel noted. “That means patient buyers are finally getting a bit of leverage. They’ll have more choices, and in some cases, a better shot at negotiating.”
For people like Aiden Smith, a software engineer in Chicago looking to buy his first home, the moment is still complicated. “I’ve saved up for two years, and my job is stable,” he said. “But with rates where they are now, the monthly payment for even a modest house is north of $4,000. It’s not that I don’t want to buy—I just don’t want to get trapped.”
In short, while May’s uptick in pending sales is a welcome surprise, it’s far from a guarantee of a market recovery. The months ahead will hinge on mortgage rate trends, seller behavior, and buyer confidence—an uneasy trio that could either open doors or slam them shut.
Still, for the first time in a while, the U.S. housing market feels like it’s inching toward balance. And for many buyers, that’s enough of a reason to look twice.