The Spanish real estate market is experiencing a remarkable boom: in May 2025, home sales soared by an impressive 39.7% compared to the previous year. This marks the highest transaction volume for a May since 2007, as announced by the National Statistics Institute (INE) on Tuesday. This eleventh consecutive increase coincides with easing interest rates, solidifying market consolidation at levels not seen since the housing bubble.
A total of 61,054 property acquisitions were registered, 17,337 more than a year ago. This strong increase even surpassed the 59,984 transactions recorded in 2022, a “golden year” for the Spanish property market after the bubble. Indeed, one has to go back 18 years in the INE’s historical series to find a more dynamic May than that of 2025, when 75,883 transactions were achieved in 2007, a market still fueled by the brick boom. The robust growth in acquisitions in May is significant compared to the development in previous months. While sales had weakened in April due to the discrepancy in the Easter calendar (recovering by only 2.3% year-on-year), May followed a March that saw a 40.6% increase, and the year began with increases of 11% in January and 13.9% in February. Despite notable fluctuations in year-on-year change rates, market behavior has been quite stable so far this year, consolidating around 60,000 monthly sales. In the first five months of 2025, house sales have increased by 20.1% compared to the same period last year.
Driving Forces: New and Existing Homes in Focus
The increase in activity in May was driven by the rise in acquisitions of both new and existing homes, which grew by 42.1% and 39% respectively compared to May 2024. Specifically, 12,785 sales of new builds were registered, the highest volume for May since 2012, and 48,269 for existing homes, a record in the historical series. Despite the strong growth in new construction, four out of five transactions still involve used properties. Sales of unsubsidized homes (57,172) also represent the majority compared to subsidized homes (3,882), which accounted for only 6.4% of the total, with a 13.9% increase compared to 2024.
Regional Variations and Interest Rate Effects
Sales growth in May was evident in all Autonomous Communities, albeit with varying intensity. Castilla-La Mancha and Galicia saw the largest increases, over 65%, followed by La Rioja (59%) and Murcia (57.2%). In the Balearic and Canary Islands, however, the increase did not reach 20%. In terms of transaction volume, Andalusia, the Valencian Community, Catalonia, and Madrid led the list as usual.
The recovery of the real estate market for almost a year has been significantly favored by the de-escalation of interest rates, after the European Central Bank (ECB) made a policy shift in the eurozone’s monetary policy in mid-last year and implemented initial cuts. Simultaneously, Euribor, which serves as the benchmark for most variable mortgages in Spain, has also begun its decline – only briefly interrupted last month by geopolitical tensions – which has also improved the conditions of the mortgages offered, thus favoring home purchases.
Optimism and Challenges: Price Increases Dampen Affordability
María Matos, spokesperson for Fotocasa, commented on the development: “After the change in the mortgage cycle triggered by the de-escalation of interest rates, buyer optimism and confidence in the market, coupled with an increase in savings rates and more attractive mortgage conditions, have given 2025 tailwind to show dynamic activity throughout the year.” She added: “If this pace of an average of more than 60,000 signings is maintained, 2025 could become the best year since 2007, when 775,000 transactions were achieved. These figures indicate that the golden age for housing sales continues, driven by very intense demand.”
However, she also warns that prices will continue to rise throughout the year. The Bank of Spain warned in its latest report on Monday that the price increase is diluting the improvement in access to financing and solidifying the difficulties of a growing segment of the population in affording a home. According to valuation company Tinsa, prices in capital cities and major urban areas have risen by 11.2% in the last year, up to June.
