Sales of previously occupied U.S. homes slowed for the sixth consecutive month in July, deepening the housing market’s slide under the weight of sharply higher mortgage rates, surging inflation and slower, but still solidly rising home prices.
The National Association of Realtors said Thursday that existing home sales fell 5.9% last month from June to a seasonally adjusted annual rate of 4.81 million. That’s lower than what economists were expecting, according to FactSet.
Sales fell 20.2% from July last year. Sales have now fallen to the slowest pace since May 2020, near the start of the pandemic.
The last time there was a six-month losing streak for home sales was between August 2013 and January 2014.
The slowdown in sales was most pronounced in the Western part of the country, home to some of the nation’s most expensive housing markets. Sales in the region slumped 30% last month from a year ago, NAR said.
Even as the housing market is losing steam, home prices have continued to rise sharply. The national median home price jumped 10.8% in July from a year earlier to $403,800. That’s a slower rate of growth than earlier this year, when prices were climbing annually by around 20%.
The July sales report is the late evidence that the housing market, a key driver of economic growth, is slowing from its torrid pace in recent years as homebuyers grapple with sharply higher mortgage rates than a year ago.
Average weekly interest rates for a benchmark 30-year home loan have been easing since climbing to 5.81% in June. The rate fell this week to 5.13%, according to mortgage buyer Freddie Mac. That’s well above where it was a year ago when it averaged 2.86.
House hunters had a wider selection of properties to choose from in July, as the number of properties for sale rose 4.8% from June to 1.31 million homes. That was unchanged from July last year.
Still, on average, homes sold in just 14 days of hitting the market last month, matching a record pace from June. Before the pandemic, homes typically sold more than 30 days after being listed for sale.
At the current sales pace, the level of for-sale properties amounts to a 3.3-month supply, the NAR said. That’s up from 2.9 months in June, and 2.6 months in July 2021. That’s still short of the 5- to 6-month supply that reflects a more balanced market between buyers and sellers.