July turned out to be a fairly unpleasant month for people selling a home and for buyers. Sales continued to fall but home prices ticked higher.
The National Association of Realtors (NAR) reports sales of existing homes declined 2.2% from June. Compared to July 2022, sales fell off a cliff and were down 16.6%.
On a monthly basis, sales were slightly higher in the West but were down in the Northeast, Midwest and South. All four regions registered year-over-year sales declines.
“Two factors are driving current sales activity – inventory availability and mortgage rates,” said NAR Chief Economist Lawrence Yun. “Unfortunately, both have been unfavorable to buyers.”
Buyers with good credit still had to pay close to 7% for a mortgage. Rates have moved beyond 7% in August.
Finding a home to purchase was just as much of a problem. Total inventory was up slightly from June but was down nearly 15% from 12 months earlier.
Inventory levels are keeping prices high
Housing economists say it’s that low inventory number that is keeping home prices elevated. The median existing-home price for all housing types in July was $406,700, an increase of 1.9% from July 2022. Prices rose in the Northeast, Midwest and South but were unchanged in the West.
Single-family home sales slid to a seasonally adjusted annual rate of 3.65 million in July, down 1.9% from 3.72 million in June and 16.3% from the previous year. The median existing single-family home price was $412,300 in July, up 1.6% from July 2022.
“Most homeowners continue to enjoy large wealth gains from recent years with little concern about home price declines,” Yun said. “However, many renters are concerned as they’re facing growing affordability challenges because of high interest rates.”
The exceptions to fast-rising rents can be found in Florida. The CoStar Group reports that a recent wave of apartment construction has shifted the supply and demand balance to renters, causing rents to stabilize, and in some cases fall in Tampa.
For those secretly hoping for a housing market crash to lower prices, that doesn’t appear to be in the cards – at least not in the immediate future. Distressed sales – foreclosures and short sales – represented only 1% of sales in July, virtually unchanged from June and the previous year.