Home sales in the United States saw a modest gain in July, with closed sales of previously owned homes rising by 1.3% compared to June. This marks the first increase in five months, according to the National Association of Realtors (NAR). However, sales were still 2.5% lower than the same period last year.
The Northeast region of the country saw the biggest gains in home sales, while the Midwest remained flat. Prices also rose the most in the Northeast. Lawrence Yun, the NAR’s chief economist, noted that despite the modest gain, home sales are still sluggish. However, consumers are experiencing more choices and improved affordability due to lower interest rates.
It’s important to note that these sales are based on contracts likely signed in May and June, when mortgage rates were over 7% for the popular 30-year fixed loan. Mortgage rates began dropping in July and are now hovering around 6.5%.
Interestingly, all-cash offers made up 27% of July sales, which is higher than the historical norm. This indicates that buyers are willing to make substantial cash purchases in the current market.
The supply of homes for sale continued to increase in July, with 1.33 million houses on the market. This represents an increase of 0.8% from June and a significant 19.8% increase compared to July 2023. Despite the rise in supply, home prices have not cooled down. The median price of an existing home sold in July was $442,600, reflecting a year-over-year increase of 4.2%.
First-time buyers accounted for 29% of sales in July, remaining unchanged from June but down from 30% in July 2023. Historically, first-time buyers make up a larger portion of home sales, closer to 40%. However, affordability has become a challenge in recent years due to rising home prices and higher mortgage rates.
With mortgage rates now slightly lower, there has been a pickup in demand. A report from Redfin, a real estate brokerage, revealed that requests for tours and other buying services from Redfin agents rose by 4% in the last week, reaching their highest level in two months.
In conclusion, the real estate market in the United States saw a modest improvement in July, with home sales and prices experiencing some gains. However, sales still remain sluggish overall. The increase in supply did not have a cooling effect on prices, and affordability remains a concern for first-time buyers. Lower mortgage rates are starting to stimulate demand, as seen in the increased interest in home tours and buying services.
