Home Sales Fall 2.2% Amid High Rates, Low Supply
BY WILL PARKER AND NICOLE FRIEDMAN
Home sales fell in July for the fourth time in five months, extending one of the deepest housing slumps in recent memory.
Sales of existing homes, the majority of purchases, decreased 2.2% in July from the prior month to a seasonally adjusted annual rate of 4.07 million, the National Association of Realtors said Tuesday. That was the slowest monthly sales pace since January and the slowest July pace since 2010.
The combination of high mortgage rates, near-record home prices and limited inventory has been suffocating sales, which were down 16.6% from a year earlier in July. With mortgage rates last week rising back above 7% to a two-decade high, sluggish home sales activity is expected to continue for a while.
“Two factors are driving current sales activity—inventory availability and mortgage rates,” said Lawrence Yun, NAR’s chief economist. “Unfortunately, both have been unfavorable to buyers.”
The Federal Reserve’s campaign of raising interest rates to curb inflation is putting upward pressure on mortgage rates. And a limited supply of homes is keeping prices high.
The national median existing home price rose 1.9% in July from a year earlier to $406,700. It was the fourth time on record that this figure had risen over $400,000, NAR said.
Economists surveyed by The Wall Street Journal had estimated sales of previously owned homes to fall 0.2% in July.
Though there are fewer home buyers now than a year ago, languid levels of supply are keeping prices from falling, when viewed annually. Home prices have risen much faster than Americans’ incomes since 2000, Yun said, creating an affordability gap that is also holding back sales.
Total sales inventory stood at 1.11 million units in July, down 14.6% from the same month last year, NAR said.
Buyers who do pull the trigger today can’t count on discounts.
Christopher and Emily Miller moved from Wisconsin to Washington state this month. They started house hunting in Seattle in 2022 and lost out on multiple offers to higher bidders. While the market got less competitive this year, prices came down less than they had hoped.
“The number of bidders decreased,” Christopher Miller said, “and whoever was left was still willing to pay the same prices.” The Millers bought a two-bedroom house in Seattle in June. Then they listed their Milwaukee house in July, and accepted an offer the first weekend.
Most buyers will get no help from mortgage interest rates soon, after the average rate for a 30-year fixed hit 7.09% last week, according to data from Freddie Mac.
Tim and Ellen VanWingerden recently moved from Lexington, Ky., to Louisville. They locked in a 5.4% interest rate in May and closed on a five-bedroom house the following month. Tim VanWingerden said he was surprised at how competitive the market remained. “We came in a little bit above asking.”
Those who can stomach the higher cost of a home loan might find more to like in the new construction market, where builders are benefiting from a dearth of existing homes. Sales of newly built homes were well up in June, compared with a year earlier, the Census Bureau said. Newly built homes have accounted for a higher share of single-family homes for sale this year than their historical average.
Existing home sales fell the most month-over-month in the Northeast, down 5.9%. The only region where sales rose was in the West, where they were up 2.7% from the previous month.