The numbers: Higher mortgage rates and a persistent shortage of homes for sale pushed U.S. home sales down in July to a six-month low.
Sales of previously owned homes fell by 2.2% to an annual rate of 4.07 million in July, the National Association of Realtors said Tuesday.
That’s the number of homes that would be sold over an entire year if sales took pace at the same rate every month as in July. The numbers are seasonally adjusted.
Home sales in July were the lowest since January 2023. Sales activity for the month of July was the lowest since the so-called Great Recession.
“ ‘The existing-home market remains moribund, as most homeowners are staying put, enjoying their 3% and 4% mortgages.’”
Existing-home sales only fell to a lower annualized rate in January 2023, when they dropped to 4 million.
The monthly sales figure missed the mark set by economists on Wall Street. They forecast 4.15 million existing-home sales in July.
Compared with July 2022, home sales were down by 16.6%.
Key details: The median price for an existing home in July was $406,700, up 1.9% from a year ago. Home prices peaked in June 2022, when the median price of a resale home hit $413,800.
Around 35% of properties are being sold above the list price, the NAR noted.
The total number of homes for sale in July fell by 14.6% from last July — to 1.11 million units. Housing inventory for the month of July, particularly of single-family homes, is at the lowest level since the early 1980s.
Homes listed for sale remained on the market for 20 days on average, up from 18 days in July. Last July, homes were only on the market for 14 days.
Sales of existing homes were only up in the West, by 2.7%. The median price of a resale home in that region was $610,500.
All-cash buyers were responsible for 26% of sales nationally. The share of individual investors or second-home buyers was 16%. About 30% of homes were sold to first-time home buyers.
The NAR forecast calls for U.S. existing-home sales of 4.38 million in 2023.
Big picture: As the 30-year mortgage rate hovers around 7.5% in August, buyers are pulling back, and that’s likely to damage home-sales figures further, unless rates fall in the near term.
Even home builders, who don’t have the same inventory issues as the existing-home market, are concerned about rising rates and a drop in buyer traffic.
What the Realtors said: “Two factors are driving current sales activity — inventory availability and mortgage rates,” Lawrence Yun, chief economist at the National Association of Realtors, said. “Unfortunately, both have been unfavorable to buyers.”
What are economists saying? “The existing-home market remains moribund, as most homeowners are staying put, enjoying their 3% and 4% mortgages, even as 30-year mortgage rates on current transactions exceed 7%,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note. “The result is a dearth of homes on the market. “
Overall, “it feels like we are in for a period of low activity, a tight market, and therefore firm prices,” he added.