In July, closed sales of previously owned homes increased by 1.3% compared to June, reaching a seasonally adjusted, annualized rate of 3.95 million units. This marked the first uptick in sales after five consecutive months of decline. However, sales were still 2.5% lower compared to the same period last year. The Northeast region experienced the most significant increases in sales, while the Midwest saw sales remain stagnant. Additionally, prices surged the most in the Northeast region.
Despite the modest increase in home sales, Lawrence Yun, the chief economist at the National Association of Realtors, acknowledged that the market still exhibited signs of sluggishness. Nevertheless, consumers benefited from greater options and improved affordability, partly due to the decline in interest rates. The reduced interest rates, which dropped from over 7% earlier in the year to around 6.5% in July, contributed to making homeownership more accessible.
Notably, all-cash offers accounted for 27% of total sales in July, up from 26% the previous year and significantly higher than historical averages. This shift in payment method reflects the financial strength of certain buyers in the market. Meanwhile, the inventory of homes for sale continued to rise in July, with 1.33 million properties available by month-end. This represented an 0.8% increase from June and a substantial 19.8% jump from July of the previous year.
Despite the increase in supply, home prices remained elevated. The median price of an existing home sold in July climbed to $442,600, up by 4.2% compared to the previous year. This persistent price growth posed challenges for first-time buyers, who accounted for 29% of total sales in July. While this figure was unchanged from June, it represented a decline from the 30% share observed in July of the previous year. Historically, first-time buyers make up nearly 40% of home sales, but affordability constraints have hindered their participation in the market.
With interest rates showing a slight decline and demand gradually recovering, there are signs of a potential turnaround in the housing market. The increased supply of homes for sale, coupled with the easing of affordability pressures, could stimulate further sales activity in the coming months. However, the market remains sensitive to economic conditions and interest rate fluctuations, highlighting the need for continued monitoring of key indicators to assess the sustainability of the current trends.
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