China's primary home price decline across 70 cities narrowed in May, while first-tier cities continued month-over-month gains

Overview

This report tracks China's National Bureau of Statistics 70-city home price data and Goldman Sachs' high-frequency real estate indicators. The core conclusion is that downward pressure on primary home prices eased marginally in May, with the annualized month-over-month decline in the population-weighted average primary home price across 70 cities narrowing from 2.9% in April to 1.8%; first-tier cities continued to rise month over month, with Shenzhen leading the gains in particular. However, nationwide new home prices still fell 3.5% year over year, and secondary home prices were still down 5% to 10% over the past year, indicating that the real estate market has not yet fully stabilized.

Core views

The report believes that price momentum in the primary housing market improved in May, mainly reflected in continued gains in first-tier cities, narrower declines in second-tier and third-tier cities, and new home transaction volumes in 30 cities during May and early June being broadly close to the same period last year. However, the improvement remains structural in nature: cities such as Shanghai, Hangzhou, and Hefei still posted year-over-year gains, but the nationwide weighted average price remained negative year over year; policy easing is still relatively localized, with key measures including Guangzhou buyback projects and expanded use of housing provident funds. Secondary home prices remain under clear pressure, representing an important risk point in judging the true extent of real estate market recovery.

Analysis framework

The report is based on NBS 70-city primary home price data, using Goldman Sachs' seasonally adjusted annualized month-over-month measure, and estimates nationwide weighted average changes using population weighting. It also classifies cities into first-tier, second-tier, and third-tier categories according to NBS definitions, compares price momentum across city tiers, and assesses demand and destocking conditions by combining high-frequency indicators such as new home transaction volumes in 30 cities and months of inventory in major cities.

Methodology notes

• Real Estate Price Tracking70-City Primary Home Price Index

  Uses NBS 70-city new home price data to observe price changes in China's primary housing market.

  The report emphasizes that this data only covers primary home transactions and does not represent the secondary housing market; secondary home prices need to be assessed separately using NBS and third-party platform data.

• Data ProcessingGoldman Sachs Seasonal Adjustment and Population-Weighted Estimation

  Uses seasonally adjusted annualized month-over-month changes and population-weighted averages to measure nationwide price momentum.

  Goldman Sachs notes that its weighted average change in home prices across 70 cities uses population weighting and may differ from a simple average; month-over-month changes are based on its seasonal adjustment.

• City SegmentationNBS City Tier Classification

  Divides the 70 cities into first-tier, second-tier, and third-tier cities to compare price performance across tiers.

  The report shows that first-tier cities continued to rise in May, while second-tier and third-tier cities still declined but with narrower losses.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China's Primary Housing Market

  Direct subject of research

  Strengths

  The annualized month-over-month decline narrowed in May, with first-tier cities and some core cities performing relatively strongly.

  Weaknesses

  The nationwide weighted average price still declined year over year, and second-tier and third-tier cities remained in month-over-month decline territory.

  Comparison

  Compared with April, price momentum improved in May; compared with the secondary housing market, the primary housing market performed more steadily.

  Risks

  If transaction volumes cannot be maintained, inventory destocking slows, or policy support is insufficient, price declines could widen again.

• China's Secondary Housing Market

  Key comparison market

  Strengths

  The report provides no clear evidence of improvement.

  Weaknesses

  Both NBS and third-party platform data show price declines of 5% to 10% over the past year.

  Comparison

  Price pressure in the secondary housing market is clearly greater than the pressure indicated by the 70-city primary home price data.

  Risks

  Continued declines in secondary home prices could weigh on household expectations and transmit pricing pressure to new homes.

• China's Macroeconomy

  The real estate cycle affects macro demand and confidence

  Strengths

  Narrower declines in primary homes and transaction volumes close to last year's level may reduce the marginal drag of real estate on the economy.

  Weaknesses

  Home prices remain negative year over year, months of inventory remain high, and the recovery in sector confidence is limited.

  Comparison

  The improvement in real estate is more structural and marginal rather than a broad-based recovery.

  Risks

  Persistent weakness in real estate could continue to affect the household wealth effect, local government finances, and demand across related industrial chains.

Key data

• Population-weighted average primary home price across 70 citiesMay 2026 annualized month-over-month -1.8%, year over year -3.5%Based on Goldman Sachs' seasonally adjusted measure; April figures were annualized month-over-month -2.9% and year over year -3.6%, respectively.
• Home prices in first-tier citiesMay 2026 annualized month-over-month +1.4%April was +0.7%; Shenzhen was +3.9% annualized month over month in May versus +1.6% in April.
• Home prices in second-tier citiesMay 2026 annualized month-over-month -1.1%April was -2.7%, with the decline narrowing.
• Home prices in third-tier citiesMay 2026 annualized month-over-month -1.8%April was -2.9%, with the decline narrowing.
• Year-over-year performance in selected citiesShanghai +3.7%, Hangzhou +2.0%, Hefei +0.8%New home prices in these cities still maintained year-over-year gains in May.
• Secondary home pricesDown 5% to 10% over the past yearBased on NBS and some third-party platform data; the report emphasizes that this measure differs from the 70-city primary home data.
• New home transaction volume in 30 citiesBroadly close to the same period last year in May and early JuneFrom Goldman Sachs' high-frequency tracking indicators.
• Months of inventory in major citiesFell to 28.5 in May from 28.9 previouslyMonths of inventory is defined as salable gross floor area divided by rolling 12-month sold gross floor area; the decline was mainly driven by second-tier cities.

Impact & implications

The report's implication for China's real estate sector is that there are signs of marginal easing in downward price pressure, especially as first-tier cities and some core cities continue to perform more strongly, which helps improve market sentiment. However, nationwide year-over-year declines, falling secondary home prices, and high inventory still limit the strength of the recovery. For the macro outlook and asset allocation, the drag from real estate may ease somewhat, but this is still insufficient to confirm that the sector has entered a broad upcycle; further validation will still depend on policy easing, sustained transaction activity, and improved inventory destocking.

Risks

• The 70-city data only represents the primary housing market and may underestimate downward pressure on secondary home prices.
• Policy easing remains relatively localized; if it cannot spread to more cities, market improvement may be difficult to sustain.
• Prices in second-tier and third-tier cities are still falling, and regional divergence may continue to widen.
• Months of inventory remain high; if sales improvement is insufficient, destocking pressure may rise again.
• The information and forecasts disclosed in the report may be adjusted as public data and the policy environment change.

What to watch

• Subsequent month-over-month and year-over-year changes in NBS 70-city new home and secondary home prices.
• Whether home price momentum in first-tier cities, especially Shenzhen and Shanghai, can continue.
• Whether price declines in second-tier and third-tier cities can continue to narrow and turn positive.
• Whether new home transaction volume in 30 cities continues to stay close to or exceed the same period last year.
• Whether months of inventory in major cities continue to decline.
• Whether local policy easing expands from localized measures to more systematic demand support.