The housing market witnessed a decline in existing-home sales in July, according to the National Association of Realtors (NAR). The sales downturn was prominent in the Northeast, Midwest, and South regions, with the West being the only exception that observed growth over June. All regions, however, saw a decrease in year-over-year sales.
The total existing-home sales, which cover single-family homes, townhomes, condominiums, and co-ops, dropped 2.2% to an annual rate of 4.07 million in July, marking a significant year-on-year decrease of 16.6% from 4.88 million recorded in July 2022.
Lawrence Yun, NAR’s chief economist, attributed this downtrend to limited inventory and rising mortgage rates, both of which are affecting potential buyers adversely.
"Most homeowners continue to enjoy large wealth gains from recent years with little concern about home price declines,” Yun said. “However, many renters are concerned as they’re facing growing affordability challenges because of high interest rates."
Housing inventory at the end of July stood at 1.11 million units, a 3.7% increase from June. However, this figure is still 14.6% lower than the same time last year. The current unsold inventory can sustain for 3.3 months at the prevailing sales speed, marking a slight increase from June and July 2022.
July's median price for existing homes touched $406,700, registering a 1.9% increase from the previous year. Interestingly, this was the fourth instance where the median sales price crossed the $400,000 threshold, echoing trends from June 2023, June 2022, and May 2022.
Properties remained on the market for an average of 20 days in July. A majority (74%) of homes sold during the month were listed for less than a month. First-time homebuyers contributed to 30% of sales in July, a slight rise from June and the previous year. Additionally, all-cash transactions made up 26% of the sales in July.
The 30-year fixed-rate mortgage recorded a rate of 7.09% as of Aug. 17, revealing a considerable hike from the 5.13% seen a year ago. Despite the present scenario, Yun remains optimistic, believing that "falling mortgage rates will rejuvenate the market and stimulate movement."
On further segmentation, single-family home sales decreased by 1.9% from June and 16.3% year-over-year. Conversely, condo and co-op sales saw a more significant decline, dropping 4.5% from June and a notable 19.2% from the prior year.
In regional statistics, the Northeast saw a 5.9% month-on-month sales decline, the Midwest 3%, and the South 2.6%. The West bucked the trend with a 2.7% increase in sales.
