July Existing Home Sales Edged Up From Near Rock Bottom

More homes are up for sale, but not enough to drive prices down or break the slow housing market from the doldrums.

The volume of sales for existing homes rose 1.3% in July from June but remained near the lowest ever, the National Association of Realtors said Thursday. Houses sold at a seasonally adjusted annual rate of 3.95 million, the slowest pace for any July since 2010. It was the first time in five months that sales had risen.

Despite an uptick in inventory—up 0.8% from June and 19.8% over the last 12 months—high prices and lack of selection continue to stifle sales. There were 1.33 million homes on the market in July, far fewer than the 1.9 million for sale in July 2019 before the pandemic hit. The median existing-home sales price was $422,600, 4.2% higher than the previous July. 

Tough Market for First-Time Buyers

The figures highlighted how daunting the housing market has become for first-time buyers since the pandemic hit—home prices are up 49% from July 2019, when the median home sold for $283,600.

It’s made for “quite a sizable gain over the past five years,” Lawrence Yun, chief economist at the National Association of Realtors, said on a conference call with reporters. “Definitely very good news for homeowners getting all of those gains, but frustrating news for people who want to enter the homeownership market.”

Mortgage rates have been falling in recent months, and economists say that could help break the high-price, low-sales dynamic that’s defined the housing market for the past few years. According to Freddie Mac, the average rate offered for a 30-year mortgage was 6.46% this week, down from the recent peak of 7.79% last fall. Rates have fallen as financial markets anticipate the Federal Reserve will cut its influential fed funds rate next month as it winds down its battle against inflation.

‘Lock-In Effect’ May Be Easing

For-sale inventory has been low because many homeowners have been reluctant to trade in home loans they secured when fixed rates were lower, but the recent drop in rates is eroding this “lock-in effect.”

However, Yun noted inventory is still low enough that buyers have to compete for the relatively few homes on the market, keeping upward pressure on prices. 

“Inventory is trying to increase back up to normal, but it’s not back up to normal yet,” he said.