Home Sales Break Slump as Mortgage Rates Ease

The month of July saw U.S. home sales break a four-month slide while mortgage rates throughout the country have begun to ease.
On Thursday, data from the National Association of Realtors showed that existing home sales increased by 1.3 percent in July when compared to the previous month. The seasonly adjusted annual rate of home sales in July reached 3.95 million, the data showed.
Despite a rise from the previous month, the number of existing home sales in July is still down by 2.5 percent from the same month in 2023.
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For the 13th straight month, home prices have risen year-over-year. The national median sales price jumped 4.2 percent compared to the previous year, reaching $422,600. While slightly below June’s record high, last month’s median still marked the highest ever recorded for July.
Mortgage buyer Freddie Mac told the Associated Press (AP) that the U.S. housing market has been mired in a prolonged sales slump since 2022, triggered by rising mortgage rates that followed the end of pandemic-era lows. Last year, existing home sales plunged to their lowest point in nearly three decades, as the average rate for a 30-year mortgage hit a 23-year high of 7.79 percent.
However, current mortgage rates have begun to ease after reaching 7.22 percent in May. As of August, the average mortgage rate is around 6.5 percent, which is the lowest the nation has seen in a year.
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Lawrence Yun, a chief economist at the National Association of Realtors, told the AP that “despite the modest gain, home sales are still sluggish.”
“But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates,” Yun said.
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Even with an ease in recent mortgage rates, the price of homes for many Americans continue to remain high. The median home price has increased by 51 percent over the past five years.
The data from the National Association of Realtors also showed that at the end of July, there were roughly 1.33 million unsold homes throughout the U.S., which is an increase of 0.8 percent from June and 19.8 percent from July 2023.
First-time homebuyers, lacking home equity for down payments, are still struggling to break into the market. Last month, they made up 29 percent of all home sales, the same as in June but slightly down from 30 percent in July 2022. Historically, first-time buyers have comprised 40 percent of the market.
Many economists have predicted that home sales could continue to see an increase in the coming months, as long as mortgage rates continue to ease.