Home Sales Just Hit a 5-Month High. Here's What That Tells Us About Where the Market Is Actually Headed.

Everyone's been waiting for a sign that the housing market is finding its footing again.

Well — the sign just arrived. And it's bigger than most people realize.

What the Latest Data Actually Shows

According to the National Association of Realtors, existing home sales rose 3.2% in May from the previous month to a seasonally adjusted annual rate of 4.17 million units — the highest level since December. TheStreet

And here's the part that makes this number more meaningful: sales rose even as mortgage rates have continued to mostly trend higher this spring, although they remain below where they were a year ago. National Association of Realtors

In other words, buyers didn't wait for perfect conditions. They moved anyway. And that tells you something important about the underlying demand that's been building in this market.

As NAR Chief Economist Lawrence Yun put it directly: "More Americans are on the move, with home sales rising to the highest level since December. This is great news for the housing market and the economy. Improving affordability is helping drive this momentum. Even with mortgage rates ticking up compared to earlier in the year, they remain lower than a year ago and are essentially at the long-term historical average." National Association of Realtors

The First-Time Buyer Comeback Is Real

Here's the detail in this report that deserves the most attention — especially for anyone who's been telling themselves they can't compete in this market.

One of the more surprising developments in May was the return of first-time buyers, which accounted for 35% of all purchases — the highest share since June 2020. Norada Real Estate

That's up from just 30% a year ago. A five-point jump in one year — in a market where first-time buyers have been getting squeezed out for years.

Economists and realtors say a 40% share in this category is needed for a robust housing market. We're not there yet. But the direction is clear and the momentum is real. Redfin

What's driving this return? Income growth has been outpacing home-price growth in many areas, helping some buyers feel more comfortable reentering the market. That does not mean affordability is easy. Monthly payments are still a major factor. But compared with last year, some buyers are seeing slightly better conditions.

For first-time buyers in Rancho Cucamonga and the Inland Empire who've been on the fence — this is your peer group moving. The buyers who felt priced out a year ago are finding ways to make it work now. And the ones who move while conditions are improving — before the next wave of buyers pushes competition higher — are the ones who get ahead of it.

What About Home Prices? Here's the Honest Answer.

Home prices continued to rise nationally last month. The U.S. median sales price increased 1.3% in May from a year earlier to $429,300 — an all-time high for any May on data going back to 1999. Home prices have risen on an annual basis for 35 months in a row. Ramsey Solutions

Thirty-five consecutive months of year-over-year price growth. Let that sink in.

But here's the nuance that matters: home price growth is now lagging income growth in many areas. Prices are still rising — but slowly. And wages are outpacing them. That combination is exactly what gradual affordability improvement looks like in practice. Ramsey Solutions

For buyers in Pasadena and LA County — where prices are higher than the national median — this slow price growth environment is actually your friend. The home you're targeting isn't running away from you at 10% a year the way it was in 2021. It's moving at 1–2%. That gives you time to prepare and position without feeling like you're permanently falling behind.

What the Inventory Picture Looks Like Right Now

Inventories also continued to improve. At the end of May, there were 1.55 million homes on the market, up 3.3% from April.

May's month-end inventory translates to a 4.5-month supply at the current sales pace. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

We're getting closer to balance. Not there yet — which means sellers still have some structural support for prices — but close enough that buyers have meaningfully more choices and leverage than they did two years ago.

In Rancho Cucamonga, that inventory improvement is showing up in real options. More listings. More time to think. More room to negotiate.

In Pasadena, the market remains tighter — but even there, the frenzied multiple-offer situations on every listing have calmed considerably.

The Signal Sellers Shouldn't Ignore

Here's what this data means if you've been sitting on the fence about listing.

Buyer demand just proved it's alive — even with elevated rates. The gains suggest that the housing market is beginning to regain traction after several years of elevated borrowing costs and limited inventory weighed on transaction activity. TheStreet

And critically — distressed sales, including foreclosures and short sales, accounted for just 1% of transactions. The buyers coming to the table are qualified, motivated, and ready to close. This isn't a market of desperation — it's a market of pent-up demand finally finding its release. TheStreet

For sellers in Southern California who've been waiting for the right moment — motivated buyers are in the market right now. The question is whether your home is positioned to meet them.

What This All Adds Up To

Let me put the full picture together simply:

Home sales just hit their highest level in five months — despite elevated rates. First-time buyers are returning at the highest rate since June 2020. Prices are rising slowly and steadily — not crashing, not exploding. Inventory is improving but still below balanced levels. And income growth continues to outpace home price growth.

That combination — taken together — paints a picture of a market that's healing. Not perfectly. Not quickly. But consistently and in the right direction.

The buyers who benefit most from a healing market aren't the ones who wait until recovery is obvious and fully priced in. They're the ones who read the early signals — like a 3.2% jump in sales driven by returning first-time buyers — and move while the opportunity is still in front of them.

🔑 Bold LA Key Takeaway

Home sales just hit a five-month high. First-time buyers are coming back. Affordability is improving gradually. And the market is moving — not waiting.

Whether you're a buyer who's been hesitating or a seller wondering if demand is actually there — this data answers both questions. Demand is real. Buyers are moving. The question is whether you're positioned to take advantage of the momentum that's building right now.

Let's talk about what this market moment means for your specific situation — and what the right move looks like for you heading into the second half of 2026.

That wraps up today's blog — appreciate you stopping by.
And as always, if you want it to sell, call Terrell… and if you want to buy, I'm still the guy.