Existing Home Sales Rise in July

Existing home sales rebounded in July as mortgage rates retreated from the recent peak and home price growth slowed, according to the National Association of Realtors (NAR). This rebound was also supported by inventory improvements, with housing supply at its highest level since May 2020. Despite the ever-so-slight improvement in housing affordability, higher mortgage rates and elevated home prices continue to sideline buyers.

Mortgage rates have hovered between 6.5% and 7% due to ongoing economic and tariff uncertainty this year, prompting the Fed to pause interest rate cuts. Though mortgage rates recently peaked at 6.89% in May and have drifted downward in recent weeks, they are expected to stay above 6% for longer due to an anticipated slower easing pace in 2025, these prolonged higher rates and high home prices would continue to weigh on the market. As such, sales are likely to remain limited in the coming months.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 2.0% to a seasonally adjusted annual rate of 4.01 million in July. On a year-over-year basis, sales were 0.8% higher than a year ago.

The existing home inventory level was 1.55 million units in July, up 0.6% from June and up 15.7% from a year ago. At the current sales rate, July unsold inventory sits at a 4.6-months’ supply, down from 4.7-months in June but up from 4.0-months in July 2024. Inventory between 4.5 to 6 month’s supply is generally considered a balanced market.

Homes stayed on the market for a median of 28 days in July, up from 27 days last month and 24 days in July 2024.

The first-time buyer share was 28% in July, down from 30% in June and 29% from a year ago.

The July all-cash sales share was 31% of transactions, up from 29% in June and 27% a year ago. All-cash buyers are less affected by changes in interest rates.

The June median sales price of all existing homes was $422,400, up 0.2% from last year. This marks the 25th consecutive month of year-over-year increases. The median condominium/co-op price in July was down 1.2% from a year ago at $362,600.  Recent gains for home inventory will put downward pressure on resale home prices in most markets in 2025.

Geographically, three of the four regions experienced gains in existing home sales in July, with an increase of 1.4% in the West, 2.2% in the South, and 8.7% in the Northeast. Meanwhile, sales in the Midwest fell 1.1%. On a year-over-year basis, sales were up in the Midwest (1.1%), the Northeast (2.0%) and the South (1.7%) but were down in the West (-4.0%).

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 72.6 to 72.0 in June, suggesting elevated mortgage rates continued keeping buyers on the sidelines despite improved inventory. On a year-over-year basis, pending sales were 2.8% lower than a year ago, per National Association of Realtors data.