US Existing Home Sales Fall 1.7% in July as Prices Hit Record

Sales of previously occupied U.S. homes slowed again in July as record prices and the highest mortgage rates in a year proved an insurmountable hurdle for many prospective buyers.

Existing home sales fell 1.7% from June to a seasonally adjusted annual rate of 4.06 million units, the National Association of Realtors said Tuesday. That was slightly above the 4.05 million pace economists had expected, according to FactSet. July sales were up 0.7% compared with a year earlier.

Home prices continued to rise, hitting unprecedented levels for July. The U.S. median sales price increased 2% from a year earlier, to $434,100.

Last week, mortgage buyer Freddie Mac reported that the benchmark 30-year fixed mortgage rate rose to 6.69%, its highest level in just over a year, marking the fifth consecutive weekly increase.

"Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months," said Lawrence Yun, NAR's chief economist. "There's no doubt that the housing market would be thriving if average mortgage rates were to return near 6%."

Home sales have mostly hovered close to a 4-million annual pace for about three years, far short of the historic norm of roughly 5.2 million. The housing market has been in a slump since 2022, when mortgage rates began climbing from pandemic-era lows, and sales were essentially flat last year at a 30-year low.

Mortgage rates have mostly trended higher since the war between the U.S. and Iran started, as expectations of higher inflation amid surging oil prices pushed up long-term bond yields that lenders use to price home loans.

Home inventory levels remain well below historical norms. There were 1.54 million unsold homes at the end of last month, down 1.9% from June and 0.6% less than a year earlier, translating to a 4.6-month supply at the current sales pace. A 5- to 6-month supply is traditionally considered balanced.

Prices in the Northeast continued rising faster than the rest of the country, jumping 5.2% year-over-year amid an inventory shortage. First-time homebuyers made up 29% of sales, down from 33% in June, compared with a historical norm closer to 40%.