US Existing Home Sales Hit Three-Month Low in July

Existing home sales in the United States fell 1.7% in July to an annualized rate of 4.06 million units, reaching a three-month low. According to the National Association of Realtors, the decline resulted from a combination of elevated asking prices and mortgage rates that recently hit a one-year high between 6.69% and 6.81%.

Despite the drop in sales volume, the median sales price rose 2% year-over-year to $434,100, the highest July price on record. Inventory decreased 0.6% from the previous year to 1.54 million homes. Market sluggishness is attributed to rising borrowing costs linked to inflation expectations and oil price surges following the start of a war involving Iran. First-time buyers accounted for 29% of July sales, down from 33% in June.

Regional performance varied, with sales increasing in the Northeast while dropping in the South and Midwest and remaining flat in the West. While household income growth initially helped the housing affordability index increase 5.1%, recent borrowing cost increases have eroded those gains. Analysts note that homeowners with low pandemic-era mortgage rates are reluctant to sell, further constraining supply.