US Existing Home Sales Disappoint (Again) In July, Hover Near Record Lows

With mortgage rates rising and the ‘low hire, no fire’ economy leaving many anxious about their household finances, the ugly spring selling season has not been followed by a consistent rebound in existing home sales in the US.

After falling 1.4% MoM in June (revised up from a 2.4% MoM decline), US existing home sales fell again -1.7% MoM in July (worse than the -1.0% MoM exp). This dragged the annual increase in sales down to just 0.74% YoY…

Overall, existing home sales SAAR is holding very modestly off record lows, holding just above the 4 million mark…

“Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months,” Lawrence Yun, NAR chief economist, said in a statement.

He added that “there’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%.”

In recent months, home-financing costs and prices went in the wrong direction. Thirty-year mortgage rates have been climbing since the late-February start of the war in Iran, and recently reached a one-year high of 6.81%.

The median sales price increased 2% from a year earlier to $434,100.

That was the highest selling price for any July on record and extended a stretch of annual price gains that started in summer 2023.

Inventories of new homes for sale remain relatively high (and are thus pressuring homebuilders to choke back on additional supply)…

But, the inventory of existing homes for sale fell slightly (-0.6%) from a year earlier to 1.54 million – the first annual decline since Oct 2023…

By region, previously owned home sales in the South, the nation’s biggest home-selling region, decreased 3.1% to a four-month low. Sales in the Midwest fell 2%. They were unchanged in the West and up in the Northeast.

First-time buyers accounted for 29% of sales in July, down from 33% a month earlier.

One silver lining is the nation’s affordability crunch is easing when compared with last year as rising household income growth has generally outpaced home price appreciation, Mark Fleming, chief economist at First American Financial Corp., wrote in a recent blog.

However, even some of that improvement has been eroded lately because of rising mortgage rates.