Weekly China real estate transaction tracker: secondary market outperforms primary market, sector view remains In-Line

Overview

This report is Morgan Stanley's weekly database tracker for the China real estate market, focusing on registered transaction volumes for primary and secondary homes, city-tier differences, and secondary listing-price indicators. The report shows marginal improvement in transaction data in the latest week, especially with secondary home transactions growing much faster year over year than primary homes, but year-to-date primary home sales remain negative year over year.

Core views

The core view is that China real estate transactions have improved in the short term, but the structure remains divergent: on a 50-city basis, weekly primary home sales rose 5% year over year, reversing the prior week's decline; on a 10-city basis, weekly secondary home sales rose 49% year over year, extending their strong performance. By city tier, weekly primary home sales in first-tier, second-tier, and third-tier cities rose 5%, 6%, and 1% year over year, respectively; for secondary homes, first-tier and second-tier cities rose 65% and 40% year over year, respectively. The sector view is In-Line, meaning the analysts expect the sector to perform broadly in line with the relevant market benchmark over the next 12-18 months.

Analysis framework

The report uses a high-frequency real estate database tracking approach, assessing changes in sector conditions through weekly registered transaction volumes, separate primary and secondary market readings, city-tier breakdowns, year-to-date cumulative year-over-year changes, and the secondary listing-price index. The charts also use 50-city sales volumes and a 4-week moving average to smooth short-term volatility and identify trends.

Methodology notes

• Industry cycle trackingWeekly real estate transaction database

  High-frequency transaction tracking

  Weekly primary and secondary home registered transaction volumes, year-over-year changes, and city-tier distributions are used to observe marginal changes in real estate demand.

• Trend smoothing4-week moving average

  Short-term volatility smoothing

  A 4-week moving average is used to reduce high-frequency volatility in weekly transaction data and help assess the medium-term trend in 50-city sales volumes.

• Rating frameworkMorgan Stanley Industry View

  In-Line

  In-Line indicates the analyst expects performance across the covered sector over the next 12-18 months to be broadly in line with the relevant broad market benchmark.

Asset mapping & comparison

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

• China property developer stocks

  Industry-cycle-sensitive asset

  Strengths

  Strong year-over-year growth in secondary home transactions and a positive weekly year-over-year reading for primary homes may improve market expectations for near-term sector demand.

  Weaknesses

  Year-to-date primary home sales are still down year over year, and no new project launches were monitored, indicating insufficient momentum in the new-home market.

  Comparison

  The secondary home market is clearly outperforming the primary home market; secondary home year-over-year growth in first-tier cities is higher than in second-tier cities.

  Risks

  If the improvement in transactions is not sustained, developers' sales collection and valuation recovery may remain limited.

• China real estate sector

  Covered research sector

  Strengths

  Weekly primary and secondary home transactions both improved year over year, and year-to-date secondary home sales turned positive year over year.

  Weaknesses

  Cumulative primary home sales remain negative year over year, the price-tracking indicator declined, and the sector recovery remains uneven.

  Comparison

  The sector view is In-Line, indicating no clear signal of material outperformance or underweight versus the broader market benchmark.

  Risks

  Price pressure, sales volatility, and changes in policy and financing conditions could affect sector performance.

Key data

• Weekly primary home registrations in 50 cities+5% YoYThe prior week was -3% YoY; for the week ended May 17, 2026.
• Year-to-date primary home sales in 50 cities-15% YoYThe weekly improvement has not yet reversed the cumulative year-over-year decline year to date.
• Weekly primary home sales in first-tier cities+5% YoYThe prior week was -4% YoY.
• Weekly primary home sales in second-tier cities+6% YoYThe prior week was 0% YoY.
• Weekly primary home sales in third-tier cities+1% YoYThe prior week was -9% YoY.
• Weekly secondary home registrations in 10 cities+49% YoYThe prior week was +17% YoY; year-to-date was +3% YoY.
• Weekly secondary home sales in first-tier cities+65% YoYThe prior week was +25% YoY.
• Weekly secondary home sales in second-tier cities+40% YoYThe prior week was +12% YoY.
• Central China six-city secondary listing-price tracking index18.5%The prior week was 19.4%.
• New project launch monitoringNoneThe report says no new project launches were monitored last week.

Impact & implications

The short-term improvement in transactions helps ease concerns about demand in China real estate, and the strong secondary home transactions may reflect relatively better liquidity in the existing-home market. However, year-to-date primary home sales are still down 15% year over year, indicating that pressure on developers' sales remains unresolved; meanwhile, the decline in listing-price indicators suggests price expectations may still be weak. Therefore, this report supports a view of marginal stabilization rather than a broad-based recovery.

Risks

• Year-to-date primary home sales are still down year over year, so the short-term weekly improvement may not be enough to indicate a trend reversal.
• Strong secondary home transactions may not directly translate into improved primary home sales or cash flow for developers.
• The decline in listing-price indicators may imply that price expectations remain weak.
• The report discloses that Morgan Stanley has or seeks investment banking and other service relationships with some covered companies, and investors should note potential conflicts of interest.

What to watch

• Whether the year-over-year change and 4-week moving average of primary home registrations in 50 cities continue to improve.
• Whether the high growth rate in secondary home transactions across 10 cities is sustained and whether it feeds through to primary home demand.
• Whether transaction performance continues to diverge across first-tier, second-tier, and third-tier cities.
• Whether the Central China six-city secondary listing-price tracking index continues to decline.
• Whether the number of new project launches and absorption rates recover.