China Housing Price Declines Narrow in May

China’s property market showed further signs of stabilization in May 2026, as year-on-year housing price declines narrowed across all city tiers and first-tier cities recorded month-on-month price increases, according to data released by the National Bureau of Statistics on June 16.

Senior Statistician Yang Caifang of the NBS Department of Urban Statistics said that among 70 major cities, commercial housing sales prices in first-tier cities rose month-on-month in May, while second and third-tier cities saw declines. “Year-on-year declines in first, second, and third-tier cities generally narrowed,” she noted in the official interpretation of the data.

Key Data Points

First-tier cities — Beijing, Shanghai, Guangzhou, and Shenzhen — saw new home prices rise 0.2% month-on-month in May, accelerating from a 0.1% increase in April. Second-hand home prices in these cities rose 0.4% month-on-month, unchanged from the previous month. Shenzhen led among first-tier cities with a 0.4% increase in new homes and a 0.6% rise in second-hand homes.

Year-on-year, first-tier city new home prices fell 1.7%, narrowing by 0.4 percentage points from April. Second-hand home prices in these cities declined 5.8% year-on-year, a significant improvement from the 6.8% drop recorded in April.

According to Xinhua News Agency, second-tier cities saw new home prices fall 3.2% year-on-year (narrowing 0.1 ppt) and second-hand prices drop 5.7% (narrowing 0.2 ppt). Third-tier cities experienced a 4.2% year-on-year decline in new home prices — the only category where the decline widened slightly, by 0.1 percentage points.

A total of 16 cities saw month-on-month new home price increases in May, up from 14 in April, with Hangzhou leading at 0.5% growth. Shanghai remained the only first-tier city with positive year-on-year new home price growth, at 3.2%.

Inventory Declines for Third Consecutive Month

Beyond pricing, inventory data offered encouraging signals. Commercial housing inventory stood at 774.27 million square meters at the end of May, down 7.15 million square meters from April — marking the third consecutive month of decline. Residential inventory decreased by 4.39 million square meters.

Sales volumes remained relatively stable. From January to May 2026, new commercial housing sales area reached 353.15 million square meters, down 2.9% year-on-year, while sales value totaled 3.4091 trillion yuan, a decline of 3.8%.

However, real estate development investment continued to contract, falling 10.7% year-on-year in the January-May period, widening by 0.4 percentage points from the first four months of the year.

Official Assessment and Expert Analysis

At a State Council press conference on June 16, NBS Spokesperson Fu Linghui struck a cautiously optimistic tone. “Overall, policies to promote the stabilization and recovery of the real estate market continue to show effect, and the real estate market operated generally stably in May,” Fu said, as reported by 21st Century Business Herald.

But Fu also acknowledged ongoing challenges: “The real estate market is still in the process of adjustment, market confidence is still being repaired, market supply-demand relations still need improvement, and continued efforts are needed to promote the stabilization and recovery of real estate.”

Analysts highlighted the divergence between market segments. Zhang Bo, President of 58 Anjuke Research Institute, attributed Shanghai’s strong new home performance to “the concentrated launch of high-end properties in Shanghai, attracting a large number of high-net-worth individuals, driving up market activity and raising the overall average price.”

Yan Yuejin, Vice President of Shanghai E-House Real Estate Research Institute, offered a more cautious view on the second-hand market, noting it “is still in a continuous process of deep price adjustment.”

Broader Implications

The May data reinforces the narrative that China’s property market is moving toward stabilization, driven by cumulative government efforts including interest rate cuts, purchase restriction relaxations, and a “white list” financing program that has approved 6.7 trillion yuan in bank loans for real estate projects.

Yet the recovery remains uneven. First-tier cities — particularly Shanghai and Shenzhen — are showing clearer recovery signals, while lower-tier cities continue to struggle with structural oversupply and population outflows. The persistent contraction in real estate investment (-10.7% YoY) suggests developers remain cautious despite improving sales.

What to Watch

As the market enters the second half of 2026, key questions remain: Can the positive momentum be sustained through the traditional summer slowdown? Will additional stimulus measures be introduced for struggling lower-tier cities? And crucially, will improving sales translate into better financial health for China’s beleaguered developers?

For now, the data suggests the property market is on a stabilizing trajectory — but as Fu Linghui cautioned, continued effort will be required to complete the recovery.