In July, closed sales of previously owned homes rose by 1.3% compared to the previous month. This increase marked the first gain in five months. Despite this improvement, sales were 2.5% lower than the same period last year. The Northeast saw the most significant gains in sales, while the Midwest experienced flat sales. Prices also saw a notable increase in the Northeast region.
Lawrence Yun, the chief economist at the National Association of Realtors, expressed that despite the modest gain in home sales, the market remains sluggish. However, consumers are benefiting from more options and increased affordability due to lower interest rates. This improvement in affordability is a direct result of the decrease in mortgage rates from over 7% on the 30-year fixed loan to around 6.5%.
In July, all-cash offers accounted for 27% of sales, up from the previous year and surpassing the historical average. The supply of homes for sale increased by 0.8% from June to a total of 1.33 million units. This represented a 19.8% increase from July of the previous year. Despite the uptick in supply, home prices continued to rise. The median price of existing homes in July was $442,600, reflecting a year-over-year increase of 4.2%.
In July, first-time buyers made up 29% of total sales, remaining unchanged from the previous month but down from the previous year. Historically, first-time buyers typically represent around 40% of home sales. However, the challenges of increasing home prices and higher mortgage rates have impacted their ability to enter the market in recent years. With the current slight decrease in mortgage rates, there has been a gradual improvement in demand.
The real estate market in July showed signs of improvement with a rise in closed sales and increased affordability due to lower interest rates. Despite the sluggish overall trend and challenges such as rising home prices, the market dynamics are shifting, and demand is beginning to pick up. It will be crucial to monitor these trends in the coming months to assess the stability and growth of the real estate market.