US sales of existing homes fell to a three-month low in July as elevated prices and mortgage rates continued to weigh on the housing market.
Contract closings decreased 1.7% in July to an annualized rate of 4.06 million, according to National Association of Realtors figures released Tuesday. That was in line with the median estimate of economists surveyed by Bloomberg.
READ MORE:
The weaker sales figures show a moribund housing market as still-elevated asking prices and rising borrowing costs this year keep many prospective buyers sidelined. The resale market has been stuck near a 4 million annual sales rate since late 2022, awaiting a catalyst for a sustained rally.
"A significant housing market recovery is unlikely, as long as monetary policy remains relatively tight, the labor market subdued, confidence depressed, and population growth constrained by tighter immigration policies," Oliver Allen, senior US economist at Pantheon Macroeconomics, said in a note.
In recent months, home-financing costs and prices went in the wrong direction. Thirty-year mortgage rates have been climbing since the late-February start of the war in Iran, and recently reached a one-year high of 6.81%.
The median sales price increased 2% from a year earlier to $434,100. That was the highest selling price for any July on record and extended a stretch of annual price gains that started in summer 2023.
READ MORE:
A previous report showed the median sales price across the country crept up by 1.5% in the second quarter from a year ago. Inventory remains lower than pre-pandemic levels.
In July, the supply of existing homes decreased 0.6% from a year earlier to 1.54 million, the NAR report showed.
One silver lining is the nation's affordability crunch is easing when compared with last year as rising household income growth has generally outpaced home price appreciation, Mark Fleming, chief economist at First American Financial Corp., wrote in a recent
NAR's housing affordability index, which measures whether a typical family earns enough to qualify for a mortgage for a median-priced home, increased 5.1% in July from a year ago, according to new figures released Tuesday.
Previously owned home sales in the South, the nation's biggest home-selling region, decreased 3.1% to a four-month low. Sales in the Midwest fell 2%. They were unchanged in the West and up in the Northeast.
