Recent data from the National Association of Realtors shows that closed sales of previously owned homes increased by 1.3% in July compared to June. This marks the first gain in five months, although sales were still 2.5% lower than the same period last year. The Northeast saw the biggest gains in sales while the Midwest remained relatively flat. Additionally, prices rose the most in the Northeast.
Despite the modest increase in sales, Lawrence Yun, the NAR’s chief economist, pointed out that the housing market remains sluggish. However, consumers are benefiting from more choices and improved affordability due to lower interest rates. These sales figures were influenced by contracts signed in May and June when mortgage rates were over 7% but dropped to around 6.5% in July.
In July, all-cash offers accounted for 27% of sales, up from 26% the previous year. The supply of homes for sale also increased, with 1.33 million homes on the market by the end of the month – a 0.8% increase from June and 19.8% higher than in July 2023. Despite the rise in supply, home prices continued to climb. The median price of an existing home sold in July was $442,600, reflecting a 4.2% year-over-year increase.
First-time buyers made up 29% of sales in July, similar to June but down from 30% in July of the previous year. Traditionally, first-time buyers represent around 40% of home sales, but affordability challenges stemming from rising home prices and mortgage rates have impacted their participation. However, with rates now slightly lower, there is a potential for increased demand in the market.
While the real estate market showed some positive signs in July with increased sales and a rise in supply, challenges such as high home prices and reduced affordability continue to impact potential buyers. The slight decrease in mortgage rates could encourage more buyers to enter the market, but it remains to be seen how these factors will influence the overall dynamics of the housing market in the coming months.