US July existing home sales 4.06m vs 4.05m expected
- Prior was 4.09m (revised to 4.13m)
- Sales -1.7% vs -2.4% prior (revised to -1.4%)
- Home prices +2.0% y/y
- Median price $434,100
- Inventory at 4.6 months vs 4.6 months prior
The housing market is in a steady state that isn’t helped by high mortgage rates due to rising Treasury yields.
There is some steady growth in that chart but when you discount it against CPI, there is a slight-but-steady improvement in affordability. The key question next is what will happen to borrowing rates from here. There is also — in some sense — a ticking time bomb in the US housing market as construction hasn’t kept pace with household formation. So at some point there needs to be a pickup in home construction, though builders may neen the price signal to accelerate for that to happen.
For background, existing-home sales are the largest component of the U.S. housing market and are closely watched for signals on household confidence, affordability, mortgage demand and housing-related spending. The data cover closings of single-family homes, townhomes, condominiums and co-ops, making the series broader and generally less revision-prone than new-home sales, which are based on contract signings.
Through May, the market was showing a modest recovery from the rate-driven weakness that has depressed turnover since 2022. Sales rose 3.2% from April and were also up 3.2% from a year earlier, reaching a seasonally adjusted annual rate of 4.17 million — the strongest pace since December. Single-family homes drove the improvement, with sales up 3.5% month over month to a 3.80 million annualized pace, while condo and co-op sales were unchanged at 370,000.
Affordability improved somewhat, with NAR’s affordability index rising to 105.6 from 97.5 a year earlier as income growth outpaced home-price gains in many regions. Even so, affordability remains the central constraint on the market. The average 30-year fixed mortgage rate was 6.44% in May, higher than in April but below the 6.82% rate a year earlier.
Inventory is also moving in the right direction, though only gradually. Unsold supply rose 3.3% in May to 1.55 million homes, equivalent to 4.5 months of supply. Despite the increase in listings, prices remain firm: the national median existing-home price rose 1.3% year over year to a May record of $429,300, suggesting that additional supply has yet to produce broad-based price relief. First-time buyers accounted for 35% of sales, while cash buyers held steady at 25%.
