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Existing-home sales continued to fall in July as high mortgage rates and limited listings continued to lock buyers out, according to data released Tuesday by the National Association of Realtors.
Total existing-home sales plunged 2.2 percent between June and July to a seasonally adjusted annual rate of 4.07 million — 16.6 percent lower than levels in July 2022, according to the data.
“Two factors are driving current sales activity – inventory availability and mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement. “Unfortunately, both have been unfavorable to buyers.
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Total housing inventory logged at the end of July clocked in at 1.11 million units, a 3.7 percent increase from June but 14.6 percent lower than a year prior. Unsold inventory sat at a 3.3-month supply at the current sales pace, up from 3.1 months in June and 3.2 months in July 2022.
The median existing-home price for all types of homes was $406,700 in July, an increase of 1.9 percent from July 2022.
The West was the only region to tally a decrease in prices while the Northeast, Midwest and South logged increases — marking the disconnect between homeowners who continue to enjoy price appreciation despite high mortgage rates and those who do not own property, whose chances of ever owning appear to be slimming while rent prices climb.
“Most homeowners continue to enjoy large wealth gains from recent years with little concern about home price declines,” Yun said. “However, many renters are concerned as they’re facing growing affordability challenges because of high interest rates.”
With mortgage rates surpassing 7 percent, the vast majority of homeowners have no motivation to list their home and be forced to move and contend with generationally high borrowing costs. Recent research from Redfin shows that approximately 92 percent of homeowners enjoy a mortgage rate below 6 percent, while about 82 percent have one below 5 percent.
“Home shoppers have seen the number of options dwindle as homeowners are largely content to stay put and enjoy their current home, especially those with a low mortgage rate,” Realtor.com Chief Economist Danielle Hale said in a statement. “The smaller number of homeowners deciding to sell has caused active inventory to dip below year-ago levels even though homes are sitting on the market somewhat longer now versus then.”
Properties typically remained on the market for 20 days in July, up from 18 days in June and 14 days during July 2022. 74 percent of homes sold in July were on the market for less than a month and all cash sales accounted for 26 percent of transactions in July, the same as in June but up from 24 percent in July 2022, according to NAR.
