Home Sales Rise in July Amidst Growing Inventory and Stabilizing Prices

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In a landscape often defined by static markets and fluctuating prices, July's real estate activity offers a glimmer of hope and a fresh perspective. A recent uptick in existing-home sales, marking a 1.3% increase from June, hints at a potential shift in the housing market's narrative, according to the latest National Association of Realtors (NAR) report.

The July figures signal the first positive change in home sales in nearly four months, with transactions for single-family homes, townhomes, condominiums, and co-ops showing a slight rebound. Yet, the overall trajectory remains cautious, with sales still down 2.5% year-over-year. NAR Chief Economist Lawrence Yun attributes this modest recovery to improved affordability driven by lower interest rates.

"While we are seeing a slight upward trend, the market is still navigating through sluggish waters," Yun observes. "Consumers are benefiting from more choices and better affordability, thanks to a reduction in interest rates."

As of mid-August, the 30-year fixed-rate mortgage stands at an average of 6.49%, a welcome drop from last year's 7.09%. This decline is providing some relief to buyers contending with elevated home prices. The total housing inventory has risen to 1.33 million units, a substantial 20% increase from a year ago. Despite this, homes are lingering on the market slightly longer, with the average days on market stretching to 24 days in July, up from 22 days in June.

Home prices, however, continue to defy expectations. The median price for all housing types reached $422,600 in July, reflecting a 4.2% increase from the previous year. The Northeast leads the charge with an impressive 8.3% rise in median home prices, now at $505,100.

Condominium prices, which typically offer a more affordable entry point into the housing market, averaged $367,500 last month. Yet, the condo market is grappling with its own set of challenges. Yun notes that rising maintenance and insurance costs have dampened its appeal, leading to a nearly 12% decline in condo sales year-over-year.

First-time homebuyers are making their presence felt, constituting 29% of July's transactions. However, they face stiff competition from cash buyers, who represented 27% of the market. Investors and second-home buyers are particularly active, purchasing 13% of homes in July.

Here's how existing-home sales played out across various regions in July:

• Northeast: A 4.3% increase in sales from June, reaching an annual rate of 490,000. Prices climbed 8.3% year-over-year to $505,100.
• Midwest: Sales remained stable compared to June, with an annual rate of 920,000. Prices rose 4.5% from the previous year to $321,300.
• South: A 1.1% increase in sales, totaling an annual rate of 1.79 million. The median price was up 2.3% to $372,500.
• West: A 1.4% increase in sales, reaching an annual rate of 750,000. Prices rose 3.4% year-over-year to $629,500.

As the market continues to evolve, the combination of increased inventory and slightly more favorable affordability conditions paints a picture of cautious optimism. For those navigating this dynamic landscape, the key lies in understanding and adapting to these shifting trends.