The National Association of Realtors reported a 1.3% increase in closed sales of previously owned homes in July compared to June, reaching a seasonally adjusted annual rate of 3.95 million units. This marks the first gain in five months, offering a glimmer of hope for the housing market recovery. Despite this positive trend, sales were 2.5% lower than the same period last year, indicating that there is still work to be done to fully revive the market.
The Northeast saw the biggest gains in home sales and prices, while the Midwest experienced no change in sales. Prices of existing homes rose, with the median price reaching $442,600 in July, reflecting a 4.2% increase year-over-year. However, these price increases are not uniform across all regions, highlighting the variations in market dynamics at play.
The supply of homes for sale continued to increase in July, with 1.33 million units on the market by the end of the month. This represented a 0.8% uptick from June and a significant 19.8% surge from July 2023. Despite the rise in supply, home prices remained elevated, indicating that the increase in inventory was not sufficient to alleviate pricing pressures. At the current sales pace, there is a four-month supply of homes available, indicating a slight decrease from the previous month.
First-time buyers constituted 29% of sales in July, remaining stable from June but lower than the 30% reported in July 2023. Historically, first-time buyers make up a larger share of home sales, with figures closer to 40%. The decrease in their participation can be attributed to affordability challenges caused by escalating home prices and higher mortgage rates. With mortgage rates now slightly lower, there is hope that demand from first-time buyers will begin to rebound, contributing to the overall recovery of the housing market.
The uptick in home sales in July is a positive sign for the housing market recovery, indicating increased consumer confidence and affordability improvements. However, challenges such as regional disparities, pricing pressures, and changing buyer trends continue to shape the market’s trajectory. Cautious optimism is warranted as the industry navigates through these complexities towards a more sustainable and inclusive housing market.