• Pending home sales jumped 1.8% in May, far exceeding the 0.1% consensus forecast.
  • The rebound follows a sharp 6.3% decline in April, underscoring ongoing volatility in the housing market.
  • Rising inventory and moderating price gains may be easing buyer hesitancy, though affordability challenges persist.

A Surprise Rebound in Buyer Activity

Pending home sales in the U.S. rose 1.8% in May 2025, dramatically outpacing the modest 0.1% growth economists had projected. The unexpected surge suggests buyer demand may be stabilizing after April's 6.3% plunge—the steepest monthly drop in over a year.

"This isn't just a dead-cat bounce," said one housing analyst who asked not to be named while their firm finalizes its quarterly outlook. "We're seeing real momentum as inventory expands and buyers adapt to the new rate environment."

Inventory Growth Eases Market Pressures

Active listings climbed 31.5% year-over-year in May—the 19th consecutive monthly gain—pushing total inventory above one million units for the first time since before the pandemic. The swelling selection appears to be giving buyers more confidence, even as the median new home price rose 3.7% month-over-month to $426,600.

New home inventory now stands at a 9.8-month supply, up 18.1% from April. While this suggests builders are catching up with demand, industry insiders note construction labor shortages continue to constrain some markets.

The Mortgage Rate Wildcard

Despite May's uptick, pending sales remain 2.5% below last year's levels as 30-year fixed mortgage rates hover near 7%. Several lenders reported increased buyer inquiries when rates briefly dipped below 6.75% in late May, highlighting ongoing sensitivity to financing costs.

"Every basis point matters right now," said a regional lending manager at a major bank, speaking on condition their comments not be tied to specific rate forecasts. "We're seeing buyers act quickly when they sense even temporary relief."

Looking Ahead

While May's rebound offers encouragement, most analysts caution against declaring a sustained recovery. With the Federal Reserve signaling only gradual rate cuts later this year, housing affordability may remain strained even as inventory improves. The coming months will test whether May's gains reflect genuine market rebalancing or merely statistical noise in an uneven recovery.