Existing home sales increase more than expected in May

WASHINGTON - U.S. existing home sales increased more than expected in May, though rising mortgage rates and still-tight inventory remain a challenge for the housing market. 

Home sales jumped 3.2% last month to a seasonally adjusted annual rate of 4.170 million units, the National Association of Realtors said on Tuesday. Economists polled by Reuters had forecast home resales advancing to a rate of 4.07 million units.

Sales increased in the Northeast, South and Midwest regions, but were unchanged in the West. Home resales, which are counted at the closing of a contract, increased 3.2% year-on-year in May.

“More Americans are on the move, with home sales rising to the highest level since December,” said Lawrence Yun, the NAR’s chief economist. “This is great news for the housing market.” 

Last month’s sales likely reflected contracts signed in March and April. Mortgage rates started rising in March as the U.S. and Israel attacked Iran, before easing towards the end of April following a ceasefire. The Middle East conflict is fanning inflation through higher prices for energy and other products that are shipped through the Strait of Hormuz. That has helped to lift U.S. Treasury yields, which mortgages track.

The average rate on the popular 30-year fixed-rate mortgage has increased by about 50 basis points since the war started at the end of February. With prospects of an interest rate cut from the Federal Reserve fading amid rising inflation and a resilient labor market, mortgage rates are likely to remain elevated. 

The government is expected to report on Wednesday that the Consumer Price Index surged 4.2% on a year-over-year basis in May, a Reuters survey of economists predicted, which would be the largest gain since April 2023. The CPI rose 3.8% in April.

The NAR’s housing affordability index improved to 105.6 in May from 97.5 a year ago. Inflation is outpacing wage growth. The median existing home price last month rose to $429,300, up 1.3% from a year ago.

The inventory of existing homes increased 3.3% to 1.55 million units. Supply, which typically increases in May, remains well below pre-pandemic levels. Supply was up 0.6% from a year ago. At May’s sales pace, it would take 4.5 months to exhaust the current inventory of existing homes, down from 4.6 months a year ago. 

The median number of days on the market for listed properties increased to 29 from 27 a year ago. First-time buyers accounted for 35% of sales, up from 30% a year ago. Economists and realtors say a 40% share in this category is needed for a robust housing market. 

Record exports help narrow US trade deficit in April

The U.S. trade deficit narrowed in April as exports jumped to a record high, a trend that, if sustained, puts trade on course to contribute to economic growth this quarter. 

The smaller trade gap, which was reported by the Commerce Department on Tuesday, partly reflected higher energy prices because of the U.S.-backed war with Iran, which has disrupted shipping in the Strait of Hormuz. Petroleum exports hit a record high in April.

“The good news is that the trade picture is moving into better balance at the start of the second quarter as tariffs keep the growth of imports down relative to surprising strength seen in exports, but the bad news is the export growth looks uncertain, as much of it appears to be the result of higher energy prices from the Iran conflict,” said Christopher Rupkey, chief economist at FWDBONDS.

The trade gap contracted 1.2% to $55.9 billion, the Commerce Department’s Bureau of Economic Analysis and Census Bureau said. Data for March were revised lower to show the deficit at $56.6 billion instead of the previously reported $60.3 billion. 

Economists polled by Reuters forecast the trade deficit would shrink to $56.1 billion in April. 

Exports increased 2.6% to $327.1 billion, an all-time high. Goods exports surged 4.1% to a record $221.3 billion. Exports of capital goods increased $4.0 billion, boosted by computers and civilian aircraft. 

Exports of industrial supplies and materials, which include petroleum, also set an all-time high. Petroleum exports were the highest on record, boosted by higher volumes and oil prices amid the Middle East conflict. The U.S. is a net oil exporter. Consumer goods exports increased by $1.7 billion.

Imports rose 2.0% to $383.0 billion in April. Goods imports advanced 2.1% to $304.9 billion. They were lifted by a $7.0 billion increase in capital goods, mostly computers, semiconductors and telecommunications equipment, as businesses ramped up investment in artificial intelligence. 

But imports of industrial supplies and materials fell by $0.9 billion. The goods trade deficit contracted 2.8% to $83.7 billion. When adjusted for inflation, the goods trade gap narrowed $1.5 billion, or 1.8%, to $84.3 billion. Trade has been a drag on gross domestic product for two straight quarters.

“The latest trade data bode well for GDP when excluding trade in gold,” said Stephen Brown, chief North America economist at Capital Economics.

The Atlanta Federal Reserve’s GDP tracking estimate for the second quarter is running at a 3.0% annualized rate. The economy grew at a 1.6% pace in the first quarter.

The goods trade deficit with China decreased $2.6 billion to $12.0 billion, with both exports and imports declining. The U.S. had deficits on the goods trade balance with Taiwan, Vietnam, Mexico, the European Union, Canada and South Korea, among other nations. 

The Trump administration has defended its protectionist trade policy as necessary to address these imbalances. The trade surplus with the United Kingdom dropped $3.8 billion to $2.6 billion in April, reflecting declines in both exports and imports.

Exports of services fell $0.4 billion to $105.8 billion in April, pulled down by weakness in travel, transport and maintenance and repair services. But exports of other business services increased. Imports of services shot up $1.3 billion to $78.0 billion, boosted by transport, travel and insurance services.

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 9, 2026 at 10:31 AM.