The UK housing market experienced a notable cooling in May, with the volume of agreed property sales falling by 8.1% compared to the same period last year. Property data firm TwentyEA reported 109,922 sales agreed during the month, a decrease from 119,607 in May 2025. This significant dip has led the company to downgrade its full-year transactions forecast for 2026 from 1.2 million to 1.13 million. Should this revised forecast materialise, it would represent a 6.8% decline compared to 2025 activity, though it would still remain 2.6% above 2024 levels.
Economic uncertainty is being cited as a primary factor behind the weakening buyer confidence. Increased energy prices, ongoing inflation concerns, and evolving mortgage rate expectations are all contributing to a more cautious approach from potential homeowners. This slowdown is evident across all property price bands, although comparisons are also influenced by changes to stamp duty that were implemented in April of last year.
Regionally, the decline in demand has been widespread across the UK, with the notable exception of Scotland, which was not affected by the recent stamp duty adjustments. Inner London recorded the most substantial fall in sales agreed, dropping by 11.2% year-on-year. The North West also saw a significant reduction, with volumes decreasing by 6.7%. For first-time buyers, higher interest rates on mortgages continue to present affordability challenges, while existing homeowners may find it takes longer to sell their properties.
Despite the dip in sales activity, the supply of available housing remains strong. TwentyEA recorded 794,210 new instructions in the year to the end of May, marking the highest figure the company has ever documented and a 2.7% increase compared to the same period last year. March was particularly robust for new listings, with over 175,000 properties entering the market. This growth in available stock is positive news for prospective buyers, offering them more choice, particularly in the lower price brackets. Properties below £200,000 saw listings increase by 3.9% year-on-year, while the £200,000 to £350,000 range experienced a 3.0% rise in supply.
Furthermore, there are encouraging signs of greater transaction stability. The number of property sales falling through decreased by 11.1% year-on-year to 115,025. The proportion of properties experiencing at least one failed sale also declined by one percentage point. This improvement in fall-through rates across all price brackets suggests that while fewer sales are being agreed, those that do reach the agreed stage are more likely to progress to completion, indicating a more committed market among active buyers and sellers.
Nick Huntley, director at TwentyEA, acknowledged the weakening demand but also highlighted the market's underlying resilience. He noted that despite ongoing affordability pressures and geopolitical uncertainty, demand remains nearly 15% higher than in 2023 and ahead of 2024 levels. This suggests that determined buyers are still keen to move forward with purchases, even in a more challenging economic environment. The increase in new listings also provides a more balanced market for buyers, offering more options than in recent years.