The Western U.S. saw the biggest upswing in pending sales of existing single-family homes and condos in May among the country’s four major regions, with a 6% increase over the prior month.
In the nation as a whole, home sales activity was less pronounced with a 1.8% increase from April, according to the National Association of Realtors. The shift in the West, which includes the coastal states and those in the Rocky Mountains, was notable given that contracts to sell homes had plummeted there by nearly 9% one month earlier. The West had the highest median home sale price among the regions in May, $633,500, and saw a seasonally adjusted annual rate of 700,000 sales during the month. Only the Northeast saw fewer closings.
Pending sales are considered a good predictor of what actual sales of existing homes will look like in the near future. Eighty percent of contracts result in sales within two months, the NAR says on its website, with a significant portion of the rest closing in the following two months.
“Consistent job gains and rising wages are modestly helping the housing market,” NAR chief economist Lawrence Yun said in a statement. “Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.”
Mortgage rates remain high, although they’ve fallen slightly four weeks in a row, reaching their lowest level on Thursday since early May, according to mortgage giant Freddie Mac. Economic and geopolitical uncertainty this year has kept rates from dropping enough to give the housing market a substantive boost.
One factor that could be affecting sales activity in the West is a growing number of homes on the market. Four of the 10 U.S. metropolitan areas that saw the largest increases in supply in May from a year earlier were in the West, including Los Angeles, at 34.8%, San Diego, at 33%, Denver, at 31%, and Las Vegas at about 30%.
While the other three U.S. regions didn’t see as much change as the West, all saw an increase in pending sales in May. The Northeast was up 2.1%, followed by the South at 1% and the Midwest at 0.3%. On a year-to-year basis, the Midwest and South saw 2.6% and 2% increases, respectively, while contracts declined 0.5% in the Northeast and 1.2% in the West. Nationally, pending sales were up 1.1% from the same month in 2024.
The Northeast’s median sales price for existing homes trailed the West’s in May at $513,300. In the South, the median was $367,800, and it was $326,400 in the Midwest.
“The Northeast’s housing shortage is boosting home prices, with more than a quarter of homes selling above list price,” said Yun. “Conversely, more inventory in the South gives home buyers greater negotiation power. Price declines in the South should be considered temporary given the region’s strong job creation.”