In July, sales of previously occupied homes in the U.S. slowed, hindered by record prices and rising mortgage rates. According to the National Association of Realtors (NAR), existing home sales declined by 1.7% from the previous month, reaching an annual rate of 4.06 million units. This figure marginally surpassed the 4.05 million units anticipated by economists, as reported by FactSet. Although sales were higher by 0.7% compared to the previous year, the market remains under pressure.
Home prices maintained their upward trajectory, achieving unprecedented levels for July. The median sales price increased by 2% from the previous year, reaching $434,100. Previously, June witnessed a record-high median sales price of $442,800. This marked the 37th consecutive month of annual home price increases.
Mortgage buyer Freddie Mac noted a significant rise in the benchmark 30-year fixed-rate mortgage to 6.69%, marking the highest level in over a year. This increase marked the fifth consecutive weekly rise in average rates, posing added challenges for potential buyers facing substantial borrowing costs.
“No one who has a home already can afford to sell it,” stated Carl Weinberg, chief economist at High Frequency Economics. “People with ultra-low COVID-era mortgages cannot afford to give them up. If no one is selling, no one can be buying, and inventories are low.”
The U.S. housing market has been maintaining a 4-million annual sales pace for around three years, a significant drop from the historical average closer to 5.2 million. This slump has persisted since 2022, as mortgage rates climbed from pandemic-era lows. Last year, home sales stagnated, reaching a 30-year low.
Sales remain sluggish, largely due to rising mortgage rates driven by higher long-term bond yields. These yields have increased amid expectations of higher inflation, linked to rising oil prices. Home inventory levels continue to lag behind historical norms. NAR reported 1.54 million unsold homes at the end of July, a 1.9% decrease from June and 0.6% less than the previous year. This is notably below the pre-pandemic average supply of about 2 million homes.
July’s inventory equates to a 4.6-month supply at the current sales pace. A balanced market typically requires a 5- to 6-month supply.
Regionally, the Northeast experienced faster price increases, growing by 5.2% year-over-year. This surge is attributed to a scarcity of available homes in the region.
First-time homebuyers represented 29% of sales, a decrease from 33% in June but slightly higher than the 28% reported in July 2025. Historically, this demographic constitutes closer to 40% of home sales.
Leave a Reply