Home sales just had their best month since December. That came with rates still high and prices at a record.
So what pulled buyers off the sidelines? A short break on rates did most of the work.
Sales of existing homes rose 3.2% from April. They hit a yearly pace of 4.17 million.
Economists had penciled in a gain under 1%. So this jump was a real surprise.
The timing tells the story. These are closed deals, and the contracts were mostly signed in April.
That was right when mortgage rates dipped. The dip lasted only a few weeks.
It was a short window, and plenty of buyers climbed through it. They moved fast while they could.
Rates are still high, but not by past standards. They sit near the long-term average, and they remain below where they were a year ago.
"Improving affordability is helping drive this momentum," said Lawrence Yun. He is the chief economist at the National Association of Realtors.
His point is simple. Pay is finally growing a bit faster than home prices in most of the country.
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Look closer and the real estate rebound is lopsided. The gains are stacked at the top.
Homes priced over $1 million sold 11% more than a year ago. Cheaper homes went the other way.
Sales between $100,000 and $250,000 fell 5%. That shows budget buyers are still stuck.
Rich buyers care less about rates. Many of them pay cash, so the high end is carrying the whole market.
There was one bright spot lower down. First-time buyers made up 35% of sales, up from 30% a year ago.
Homes are also selling a touch faster. They sat on the market about 29 days in May, down from 32 in April.
About a quarter of all sales were paid in cash. Only 1% involved a foreclosure, a sign that owners are on solid ground.
Prices keep climbing for one main reason. There are still not enough homes to go around.
There were 1.55 million homes for sale in May. That works out to a 4.5-month supply.
A balanced market needs about six months of supply. So sellers still hold the upper hand.
That tight supply pushed the median price to a record $429,300. Rates stayed high the whole time.
This bounce was built on one thing. It was a brief drop in rates, and rates have since ticked back up.
So was May the start of something or just a one-month pop? The answer comes down to where rates go next.
For now, buyers proved they will move fast the moment rates give them room.
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