The housing market is showing renewed signs of activity as existing home sales reached their fastest pace of the year despite elevated mortgage rates and rising home prices. While affordability remains a challenge, improving inventory levels and modest gains in purchasing power are helping bring more buyers back into the market.
For San Diego County residents, the trend highlights an important shift. Buyers appear increasingly willing to move forward with purchases even as borrowing costs remain higher than many hoped.
Buyers Are Moving Forward Despite Higher Mortgage Rates
Existing home sales increased 3.2 percent from April to May, reaching a seasonally adjusted annual pace of 4.17 million homes. Sales were also up 3.2 percent compared to the same month last year, marking one of the strongest monthly performances seen so far this year.
The increase came even as mortgage rates continued trending higher throughout much of the spring. Historically, rising borrowing costs have weighed on housing demand, making the recent increase in sales particularly notable.
Key housing market statistics
- Existing home sales increased 3.2%month over month
Sales rose 3.2% year over year - Annual sales pace reached 4.17 million homes
- Sales exceeded economist expectations
- Activity reached its fastest pace since December
The data suggests that some buyers are becoming more comfortable navigating today’s financing environment rather than waiting indefinitely for lower rates.
More Inventory Is Giving Buyers Additional Options
One of the most significant shifts in the housing market is the gradual increase in available inventory. At the end of May, there were approximately 1.55 million homes available for sale nationally, representing a 3.3 percent increase from April and a 20.3 percent increase compared to one year earlier.
Although inventory remains below pre-pandemic norms, buyers now have more choices than they did during the height of the housing shortage.
Inventory trends
- 1.55 million homes available for sale
- Inventory increased 3.3 percent month over month
- Inventory increased 20.3 percent year over year
- Housing supply reached approximately 4.5 months
More inventory can create opportunities for buyers by reducing some of the intense competition that defined recent years.
Home Prices Continue Setting New Records
Even as inventory improves, home prices remain elevated. The national median existing home price reached 429,300 in May, the highest price ever recorded for the month and the 35th consecutive month of annual price growth.
The continued rise in prices reflects the reality that housing supply remains below historical norms. While affordability has improved modestly due to income growth and mortgage rates remaining below year-ago levels, price pressures have not disappeared.
For San Diego County buyers, where housing costs are already significantly above national averages, affordability continues to be one of the market’s defining challenges.
What This Means for San Diego County
The latest housing data suggests buyers are adapting to current market conditions rather than waiting for a perfect environment that may never arrive. Mortgage rates remain elevated, but improving inventory and continued demand are helping support market activity.
A similar dynamic is playing out locally. Buyers throughout San Diego County continue balancing affordability concerns with limited housing supply and long-term housing needs.
If you’re interested in how national housing trends are influencing local market activity, we recently explored San Diego’s position following the previous slowdown in home sales and what it could mean moving forward here.
The Housing Market Is Finding Its New Normal
The latest sales data suggests the housing market may be settling into a new phase where buyers, sellers, and lenders are adjusting to higher borrowing costs. Rather than waiting for a return to historically low mortgage rates, many buyers are moving forward based on personal goals, available inventory, and long-term housing needs.
As inventory continues growing and affordability conditions evolve, the remainder of the year will provide important insight into whether this renewed momentum can be sustained.
