Investing.com -- Existing home sales in the United States increased 3.2% to reach 4.17 million units at an annual rate in May, according to Morgan Stanley analysis released Tuesday. Single-family home sales climbed 3.5% month-over-month to 3.80 million units, while multifamily sales remained unchanged at 370,000 units.

The May figure exceeded Morgan Stanley's forecast of a 2.0% increase and the consensus estimate of 1.1%. Sales data for April was revised upward from 4.02 million to 4.04 million units.

Regional performance varied, with sales rising in all areas except the West, where transactions were flat. Sales through May averaged 4.07 million units, matching the full-year 2025 average.

Single-family home inventories expanded for the sixth consecutive month, now standing 5% higher than the previous year. The months of supply metric for single-family homes decreased slightly from 4.5 to 4.3 on a seasonally adjusted basis as sales picked up.

Median home prices accelerated on a monthly basis but showed slower annual growth. Prices rose 1.3% year-over-year in May, down from the 1.6% increase recorded in May 2025.

Morgan Stanley housing strategists project existing home sales will end 2026 flat due to affordability challenges. Following the May data, the firm now tracks second-quarter residential investment at 1.2% quarter-over-quarter on a seasonally adjusted annual rate basis, up from its previous estimate of 0.6%.