July home sales rise as prices approach inflection point

Sales of previously owned homes rose 2% in July compared with June to 4.01 million units, on a seasonally adjusted, annualized basis, according to the National Association of realtors. Housing analysts had been expecting a slight decline. Sales were 0.8% higher than July 2024.

These sales are counted by closings, so contacts likely signed in May and June, when the average rate on the 30-year fixed mortgage was in decline. That rate exceeded 7% briefly in May and then ended June at 6.67%, according to Mortgage News Daily.

There were 1.55 million homes for sale at the end of July, an increase of 15.7% from the same month last year. At the current sales pace, that represents a 4.6-month supply. A 6-month supply is considered balanced between buyer and seller.

Inventory is now at the highest level since May 2020 but still well below pre-Covid years.

More inventory is clearly taking the pressure off prices. The median price of an existing home sold in July was $422,400, an increase of 0.2% from the same month a year earlier and a record high price for the month of July. Prices have been higher annually for the last 25 months, but the market may now be at an inflection point.

“The ever-so-slight improvement in housing affordability is inching up home sales,” said Lawrence Yun, NAR’s chief economist. “Wage growth is now comfortably outpacing home price growth, and buyers have more choices.”

Yun noted that condominium sales increased in the South, where prices have been falling for the past year.

Activity continues to be strongest on the higher end of the market. Sales of homes priced over $1 million rose 7.1% year over year, while sales priced between $100,000 and $250,000 dropped 0.1%. Sales of homes priced below $100,000 dropped 8%.

It is now taking longer for homes to sell. The average home in July sold in 28 days, up from 24 days the year before. First-time buyers also fell off slightly, representing 28% of sales, down from 30% in June and 29% in July 2024.

Investors made up 20% of all transactions, up from 13% in July 2024. This could be due to the increase in supply.

With mortgage rates still relatively high, the share of all-cash buyers increased to 31% of transactions from 27% the year before.

“This is unusually high,” said Yun, noting stock market wealth or housing wealth could be contributing factors.