Existing home sales continued to fall in July, as homebuyer demand begins to cool. The seasonally adjusted sales rate for existing homes fell 5.9% month over month in July to a rate of 4.81 million, according to a report from the National Association of Realtors (NAR) released Thursday.
This is the sixth consecutive month of declines. On a yearly basis, existing home sales are down 20.2%.
“The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June,” Lawrence Yun, NAR’s chief economist, said in a statement. “Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers.”
Even as mortgage rates continued to rise in July, the median existing home sale price rose 10.8% year over year to $403,800, marking the 125 consecutive month of year-over-year increases. However, July’s median sale price was $10,000 less than the all-time high set in June.
“We’re witnessing a housing recession in terms of declining home sales and home building,” Yun added. “However, it’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”
Homes are also still selling at record pace. According to NAR, properties typically remained on the market for 14 days in July, the same as in June and down from 17 days a year ago. This is the fewest number of days on the market since NAR began tracking the metric in May 2011. In addition, 82% of homes sold in July were on the market for less than a month.
Despite the swift sales pace for homes, inventory has begun to pool as the number of sales wanes. At the end of July, inventory of unsold exiting homes rose to 1.31 million, representing roughly 3.3 months of supply at the current monthly sales pace. This is an increase of 4.8% compared to a month ago.
Regionally, existing home sales fell month over month in all four regions, dropping 7.5% in the Northeast, 5.3% in the South, 3.3% in the Midwest, and 9.4% in the West. Compared to a year ago, every region saw a decrease in existing home sales, with the West seeing the largest decrease at 30.4%.
“July existing home sales fell to their lowest levels since the earliest days of the pandemic, when activity virtually froze in the face of lockdowns and widespread uncertainty,” Neda Navab, the president of national brokerage operations at Compass, said in a statement. “But the market rapidly bounced back from those early pandemic lows, and today there are several reasons to be optimistic that the housing market hit its trough this summer and will rebound in the fall.”
