In July, closed sales of previously owned homes experienced a 1.3% increase compared to June, resulting in a seasonally adjusted, annualized rate of 3.95 million units. This marked the first rise in sales after five months of decline. Despite this improvement, sales were still 2.5% lower than the same period last year. The Northeast saw the highest gains in sales, while the Midwest reported flat figures. Additionally, prices showed the most significant increase in the Northeast region.
Lawrence Yun, the chief economist at the National Association of Realtors (NAR), acknowledged the modest gain in home sales but emphasized that the market remains sluggish. He noted that consumers are benefiting from more options and improved affordability due to lower interest rates. These sales data are based on contracts likely signed in May and June, when mortgage rates were above 7% for 30-year fixed loans. By July, rates had dropped to around 6.5%.
In July, all-cash offers accounted for 27% of sales, a slight increase from the previous year. This percentage is noticeably higher than the historical average. The supply of homes for sale continued to rise, reaching 1.33 million units by the end of July. This represented an 0.8% increase from June and a 19.8% jump from July 2023.
Despite the increase in supply, home prices continued to rise. The median price for existing homes sold in July was $442,600, marking a 4.2% year-over-year increase. First-time buyers made up 29% of sales in July, a figure that remained steady from June but was lower than the previous year. This percentage is below the historical average of around 40%. The affordability of homes has been impacted by rising prices and mortgage rates in recent years, but the slight decrease in rates has started to stimulate demand.
By analyzing the real estate market in July, it’s clear that while there were some positive developments such as increased sales and more choices for consumers, challenges like rising prices and a decrease in first-time buyers persist. The impact of interest rates on market dynamics remains a key factor to watch in the coming months.