July home sales break 4-month losing streak as supply surges nearly 20%

Sales of previously owned homes rose 1.3% in July from June to a seasonally adjusted annual rate of 3.95 million units, according to the National Association of Realtors. It was the first gain in five months.

Sales were down 2.5% compared to the same period last year.

Sales saw the biggest gains in the Northeast and were flat in the Midwest. Prices also rose the most in the Northeast.

“Despite the modest gains, home sales remain sluggish,” Lawrence Yun, chief economist at the National Association of Realtors, said in a statement. “But consumers are certainly seeing more choice, and affordability is improving due to lower interest rates.”

The sales are based on contracts that were likely signed in May and June, when mortgage rates were well above 7% on a 30-year fixed loan. Rates began to fall in July and are now hovering around 6.5%.

All-cash offers accounted for 27% of July sales, up from 26% a year earlier and well above the historical average.

The supply of homes for sale continued to rise in July. At the end of the month, there were 1.33 million homes on the market, up 0.8% from June and 19.8% higher than July 2023. At the current sales pace, that represents a four-month supply, slightly lower than in June.

But the increased supply hasn’t helped cool home prices. The median price of an existing home sold in July was $442,600, up 4.2% year over year.

First-time buyers accounted for 29% of sales in July, unchanged from June but down from 30% in July 2023. Historically, these buyers account for nearly 40% of home sales, but affordability has been hit hard in the past two years by rapidly rising home prices and higher mortgage rates.

With prices now down a bit, demand is starting to recover. A separate report from real estate brokerage Redfin found that requests for tours and other buying services from Redfin agents rose 4% over the past week to a two-month high.

Correction: A previous version of this story included an error in specifying the time frame for the home sales decline.