Editor’s note: Econ Review is a roundup of the month’s housing and economic market data reports.
Spring 2026 is shaping up better than previous years, leaving real estate professionals brimming with expectations for the potential of an even better summer as certain housing economy indicators continue to improve. However, lingering economic uncertainty remains, leaving some questions unanswered.
Here are some highlights from the housing and economic data that hit the news in May:
Home sales
With any awaited boom in the spring market looking to be delayed until summer, the latest data on existing-home sales saw an essentially flat trend (0.2% growth month-over-month, no change year-over-year). However, despite lackluster sales results, inventory continued to see growth for the third consecutive month (up 5.8% month-over-month and 1.4% year-over-year).
Growth in inventory, coupled with improvements in affordability, have economists maintaining a stance of “cautious optimism.”
As Realtor.com® Chief Economist Danielle Hale said, “we can be optimistic about a home sales pace that continues to hover right around 4 million despite these rate headwinds.”
The delayed releases of new-home sales data also started to catch up in May, with reports for both March and April presenting some conflicting emotions as challenges in the market persist. While March saw sales rise both month-over-month and year-over-year (7.4% and 3.3%, respectively), April’s data reversed course and fell both month-over-month and year-over-year (6.2% and 11.3%, respectively).
The consensus from economists—namely the National Association of Home Builders’ (NAHB) Chief Economist Robert Dietz—has been that as mortgage rates remain elevated, new-home sales will continue to see declines or negative reports.
As for the trajectory of future home sales, the latest data on pending home sales presented another picture of “cautious optimism,” seeing its third consecutive monthly increase this year (up 1.4%) and jumping 3.2% year-over-year. Economists are reading the signs of an already stronger spring than 2025, and a potentially stronger summer this year.
As Realtor.com Senior Economist Hannah Jones put it, “the April data reflects a seller cohort willing to engage and doing so with more realistic pricing, a meaningful contrast to last spring’s standoff.”
Home prices
Perhaps presenting the most positive signs in the market recently, home-price growth once again continued to cool off in the latest Case-Shiller data. In a turn of events this report, growth fell 0.2% month-over-month rather than recording a gain. Year-over-year growth also weakened again, falling from a 0.8% rise last report to 0.7%. The 10- and 20-City Composites also recorded month-over-month falls (-0.2% and -0.03%, respectively).
Notably, Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, stated that “home values have lost ground in real terms for nine consecutive months.”
As inventory growth continues, home prices are expected to continue to cool, providing much needed relief to buyers currently priced out of the market.
Housing construction
While economic challenges continue to put downward pressure on the construction industry, homebuilders are still working to persevere.
Even though the latest New Residential Construction report saw a slip in housing starts (down 2.8% month-over-month), they remain up 4.6% year-over-year. Once again multifamily played a large part in this positivity, with multifamily starts up a whopping 23.3% year-over-year.
Single-family construction remains lacking unfortunately, but builders are making some small strides to bridge the gap. Completed single-family homes only saw a 1% fall month-over-month, which may help ease inventory constraints in some markets.
As the construction industry remains troubled overall, so does builder confidence. The latest data did observe a small improvement (rising three points to 40) due to the bettering conditions last month, but confidence still remains in the negative (below the 50-point breakeven mark).
However, NAHB Chairman Bill Owens did note that the movement toward approval and signing of the 21st Century ROAD to Housing Act could help “ease builder concerns” and provide relief to the industry.
The overall economy
Economists warned of a potential “inflation contagion” this month as reports saw further risks to the economy.
The latest Consumer Price Index (CPI) saw inflation rise 0.6% month-over-month to 3.8% annually, and core inflation rise 0.4% month-over-month to 2.8% annually.
The report also specifically noted that over the past 12 months energy inflation has increased a whopping 17.9%, and food inflation has increased 3.2%.
The latest Personal Consumption Expenditures (PCE) Index—the Federal Reserve’s favored inflation measure—also remains well elevated, now sitting at 3.8% annual inflation.
“So far none of the warning signs are flashing red, but the data to watch are new listings, mortgage purchase applications, pending sales and cancellations,” said Realtor.com Senior Economist Jake Krimmel. “If inflation contagion takes hold, those are the places it will show up first.”
Despite continued issues within the inflation sphere, the labor market took a more positive turn as of late. The latest jobs report saw stabilization start to take hold as 115,000 jobs were added (above original expectations) and the unemployment rate hit 4.3%.
Krimmel noted that “the next question is whether this trend holds and becomes something for consumers and the housing market to build on this summer.”
With the improvements to the labor market, the Leading Economic Index—a measure of potential recession—rose even closer to the 100 point break-even mark (from 2016), growing 0.1% to 97.4. Overall, the index found that the economy remains “fragile” as inflation continues to increase, but an outright recession “remains unlikely.”
With continued mixed reports economically, and inflation continuing to push down on consumers, both confidence and sentiment saw falls in their recent reports.
In the culmination of all the current economic concerns, the Fed minutes from its last meeting confirmed the plan to potentially raise interest rates if indicators continue to worsen.
