by High interest rates and available inventory impact activity throughout the US
WASHINGTON — Year-over-year existing home sales fell 16.6% in July, a sign that high mortgage rates and lower inventories continue to upend the market.
According to numbers released by the National Association of Realtors on Tuesday, July sales fell to 4.07 million units, from 4.88 million in July 2022, a 16.6% drop. They also fell 2.2% from 4.16 million units in June.
All four regions of the U.S reported year-over-year sales declines. There were also declines compared with June activity, with the exception of the West.
The July decreases occurred as interest rates continued to climb, reaching 7.09% as of Aug. 17, which is up from 6.96% the prior week and 5.13% from a year ago, the NAR said.
Home prices also rose, with the median price in July at $406,700, up 1.9% from the median price in July 2022. Prices rose in the Northeast, Midwest and South, but were unchanged in the West.
Inventories stood at 1.11 million units, which was up 3.7% from 1.07 million in June but down 14.6% from the 1.3 million reported from a year earlier. The amount of unsold inventory equaled a 3.3-month supply, based on the current pace of sales, which was up from 3.1 months in June and 3.2 months in July 2022.
“Two factors are driving current sales activity — inventory availability and mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “Unfortunately, both have been unfavorable to buyers.”
He added that many renters are concerned “as they’re facing growing affordability challenges because of high interest rates. … Retreating mortgage rates will bring more buyers and sellers into the market and get Americans moving again.”
However, that doesn’t appear to be happening right away. Last week, mortgage rates for a 30-year, fixed rate mortgage topped 8%, the highest level in 21 years. According to bankrate.com, the current 30-year rate dropped to 7.62% as of Tuesday, while the rate for those looking to refinance is 7.79%.
The issue is of interest to the industry because home sales — whether they be newly built units or existing homes — drive people’s interest in new furniture as their new floor plans require anything from new sofas or sectionals to bedrooms or dining sets.
According to the NAR, the sale of single-family homes last month fell 16.3% from July 2022 to 3.65 million units. This also was down 1.9% from the 3.72 million reported in June. The median single-family home price was $412,300 in July, up 1.6% from July 2022. Condominium and co-op sales totaled 420,000 units in July, which was down 19.2% from July 2022 and 4.5% from June. The median existing condo price was $357,600, up 4.5% from the $342,200 reported in July 2022.
Other highlights of the report were as follows:
+ First-time buyers represented 30% of sales in July, which was up from 29% in July 2022 and 27% in June.
+ All-cash sales accounted for 26% of transactions in July, which was identical to June, but up from 24% in July 2022. Individual investors that make up many cash sales purchased 16% of the homes in July, which was up from 14% in July 2022 but down from 18% in June.
+ Distressed sales, including foreclosures and short sales, represented 1% of sales in July, which was unchanged from June and July 2022.
By region, the activity was as follows:
+ In the Northeast, sales totaled 480,000 units in July, which was down 23.8% from July 2022 and down 5.9% from June. The median sales price was $467,500, up 5.5% from July 2022.
+ In the Midwest, sales totaled 960,000 units in July, down 20% from July 2022 and down 3% from June. The median sales price was $304,600, up 3.9% from July 2022.
+ In the South, there were 1.86 million units sold in July, down 14.3% from July 2022 and down 2.6% from June. The median sales price was $366,200, up 1.7% from July 2022.
+ In the West, there were 770,000 units sold in July, down 12.5% from July 2022 but up 2.7% from June. The median sales price in the region was $610,500, unchanged from July 2022.
