Home sales jumped in May as buyers shrugged off higher mortgage rates

Home sales ticked up in May, the latest sign that buyers and sellers are staying active in the market despite higher mortgage rates and glum economic sentiment.

Existing home sales in May jumped 3.2% from a year ago to a seasonally adjusted annual rate of 4.17 million, according to National Association of Realtors data released on Tuesday. On a month-over-month basis, home sales were also up 3.2%.

May’s figures are one of the best showings for home sales in the last three years. During that time, the housing market has been in a deep freeze brought on by rising mortgage rates and high prices.

“I cannot definitively say if home sales are truly coming out of a slump, because we know there’s still uncertainty” around oil prices and mortgage rates, said Lawrence Yun, the NAR’s chief economist.

On an annual basis, sales rose in all parts of the country except for the Northeast, where supply remains severely constrained.

Economists have been hoping that improved inventory, slightly lower mortgage rates and strong wage growth will help bring wary buyers back into the market this year.

Although the figures are improving — so far this year, home sales are tracking about 0.7% ahead of last year’s pace — challenges to a full housing market recovery remain.

Mortgage rates, although lower than last year, have been stuck around 6.5% due to shocks from the Iran war. And while the labor market is holding up, wage growth has slipped below inflation, making it more challenging for buyers to afford a home.

Sales would likely rise if mortgage rates were to return to 6%, Yun said. But that’s not a given as inflation and oil price risks linger.

“We have to wait and see,” Yun said.

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

Sign up for the Mind Your Money newsletter

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

Read the latest financial and business news from Yahoo Finance