In July, closed sales of previously owned homes increased by 1.3% compared to June, reaching a seasonally adjusted annual rate of 3.95 million units. This uptick marked the first increase in sales in five months, providing a glimmer of hope for the sluggish housing market. Despite this improvement, sales were still 2.5% lower than the same period last year.
Regional Variances
Sales saw the most significant gains in the Northeast region, with prices also experiencing the highest rise in this area. However, the Midwest reported flat sales, indicating a mixed performance across different geographical locations.
Market Factors
Lawrence Yun, the chief economist of the National Association of Realtors, highlighted that although home sales are picking up slightly, affordability is improving due to lower interest rates. With mortgage rates decreasing from over 7% to around 6.5% in July, consumers are benefiting from more choices in the market.
The supply of homes for sale continued to increase in July, with 1.33 million units on the market by the end of the month. This represented a 0.8% rise from June and a substantial 19.8% surge from the previous year. Despite this growth in supply, the market remained competitive, leading to a four-month supply of homes at the current sales pace.
Pricing Trends
The median price of existing homes sold in July reached $442,600, reflecting a 4.2% increase year-over-year. The persistent rise in home prices has been a challenge for first-time buyers, who accounted for 29% of sales in July. While this percentage remained unchanged from June, it was lower than the 30% reported in July 2023.
Historically, first-time buyers make up around 40% of home sales, but affordability concerns have dampened their participation in the market. However, with mortgage rates trending downwards and demand showing signs of improvement, there is hope for a more balanced market in the coming months.
The housing market in July demonstrated a mix of positive and negative indicators. While sales and prices showed some improvement, affordability issues and supply constraints continue to pose challenges. As the market evolves in response to changing economic conditions, stakeholders must remain vigilant and adaptable to navigate the complexities of the real estate landscape.