US Existing Homes Fall 1.7% In July as Record Prices, High Mortgage Rates Stifle Would Be-Buyers

Sales of previously occupied U.S. Homes declined 1.7% in July from the prior month, reaching a seasonally adjusted annual rate of 4.06 million units, according to the National Association of Realtors. The decrease reflects continued pressure from record home prices and elevated mortgage rates that are limiting purchasing power for many prospective buyers.

The July pace slightly exceeded economist expectations of 4.05 million units and remained 0.7% above the same month last year.

Home prices continued their upward trajectory, with the U.S. Median sales price rising 2% year-over-year to $434,100. NAR noted that July prices reached unprecedented levels for that month, though June had marked an all-time high of $442,800 across any month in available data dating to 1999. Annual price increases have now occurred for 37 consecutive months.

Mortgage rates added to headwinds facing buyers. Freddie Mac reported that the 30-year fixed rate mortgage rose to 6.69%, its highest point in just over a year, marking the fifth consecutive week of increases.

Carl Weinberg, chief economist at High Frequency Economics, said: "No one who has a home already can afford to sell it. People with ultra-low COVID-era mortgages cannot afford to give them up. If no one is selling, no one can be buying, and inventories are low."

Home sales have largely remained near a 4-million annual pace for roughly three years, substantially below the historic norm of approximately 5.2 million. The market has struggled since 2022 when mortgage rates began rising from pandemic lows, with sales essentially flat last year at 30-year lows.

At month's end, there were 1.54 million unsold homes, down 1.9% from June and 0.6% from July of the prior year. This represents a significant shortfall from the approximately 2 million homes typically available before the COVID-19 pandemic. The current inventory level translates to a 4.6-month supply at existing sales pace, below the 5- to 6-month supply historically considered balanced.

In the Northeast, prices climbed 5.2% year-over-year, outpacing other regions due to inventory constraints. First-time homebuyers accounted for 29% of July sales, down from 33% in June but slightly above 28% in July of the prior year - below the historical average of roughly 40%.