The seasonally adjusted annualized rate of existing home sales in the United States fell 2.2 percent from a month earlier to 4.07 million units in July 2023, the lowest level since January and under the market’s forecast of 4.15 million. The main causes of the fall persisted as being higher mortgage rates and a lack of available inventory. 3.65 million single-family house sales were down 1.9 percent, and 0.42 million condo and co-op sales were down 4.5 percent. The Northeast, Midwest, and South saw a decline in sales, while the West saw an increase. Sales fell 16.6% from the previous year. At the end of July, there were 1.11 million unsold existing homes on the market, an increase of 3.7% from the previous month and the equivalent of 3.3 months’ supply at the current monthly sales pace. Cost-wise, the median price of an existing home increased by 1.9 percent from a year ago to $406,700, the fourth time it has exceeded that mark.
According to the National Association of Realtors, previously owned home sales decreased 2.2% from June to a seasonally adjusted, annualized pace of 4.07 million units.
Sales were down 16.6% from July of the previous year. The pace of home sales in July was the lowest since 2010.
Contracts were probably signed in May and June when mortgage rates increased from about 6.5% to well over 7% because this count is for closings.
All areas had a monthly decline in sales, with the exception of the West, where they gained 2.7%. The Northeast experienced the largest sales decline, down 5.9%.
Home sales declined due to limited supply
The National Association of Realtors attributes the decline to increased prices and a still-limited supply. At the end of July, there were 1.11 million properties for sale, 14.6% fewer than in July 2022 and the lowest number since 1999. Compared to before Covid, there are now half as many houses for sale.
That equates to a 3.3-month supply at the current sales rate. The buyer and seller are said to be in balance if there is a six-month supply.
Because of the ongoing shortage, prices and competition are rising. In comparison to July of previous year, the median price of a home sold in July was $406,700, an increase of 1.9%.
Lawrence Yun, chief economist for the National Association of Realtors, noted that while the West is the most expensive region, it has also seen some price declines.
Every region except the West saw an increase in prices in July over the previous year.
Indicating continued strong demand, around three-quarters of the residences sold were listed for less than a month. 30% of sales were above the asking price.
According to Danielle Hale, senior economist at Realtor.com, “home shoppers have seen the number of options shrink as homeowners are largely content to stay put and enjoy their current home, especially those with a low mortgage rate.”
Sales decreased across all price ranges, although the highest price range—homes over $1 million—saw the smallest decline. This is due to the fact that the top end of the market has a far greater supply, whereas the low end is the leanest.
Cash is still used by buyers to give them a competitive edge. Same as in June, but up from 24% in July 2022, all-cash sales accounted for 26% of all transactions.
In July, 16% of residences were purchased by investors, who frequently pay in cash. It was a drop from June’s 18% but an increase from July 2022’s 14%.
First-time purchasers seem to be picking up pace once more. These buyers accounted for 30% of sales, up from 27% in June, according to realtors.
Read Also: Experts say prices to hold strong
Loans from the Federal Housing Administration are also in greater demand. The low down payment requirements of these loans make them popular with first-time purchasers.
According to Lisa Sturtevant, chief economist at Bright MLS, “the housing market is at a pivotal point as we head into fall,” highlighting in particular increased mortgage rates. For some consumers, the choice between renting and buying will lean toward renting, especially in locations where rents are declining and new units are opening up.
