What the July home sales data show
Home sales fell 5.5% in July as affordability continued to be a challenge for homebuyers despite mortgage rates falling during the month. Home sales were 8.5% lower year-over-year and at the second-lowest seasonally adjusted level in the history of the data, behind April 2020. Although rates remain relatively high, the recent progress is a win for buyers who have been waiting on the sidelines and waiting for their big moment to enter the market. Selling new homeswhich are also based on contracts signed, rose 10.6% in July as buyers took advantage of lower interest rates and the large supply of new homes. Selling existing homes Interest rates also rose slightly in July, suggesting that the market, which was weak in the summer, could be re-energized by falling interest rates. Buyers looking to get back into the market will be pleased to see Inventory levels at highest level since 2020and price reductions close to pre-pandemic levels.
The housing market continues to vary regionally, but home sales declined monthly in all four regions and declined annually in all regions except the Northeast. Monthly contract signings declined 7.8% in the Midwest, 6.5% in the South, 3.8% in the West and 1.4% in the Northeast. Annually, the seasonally adjusted rate of contract signings declined 11.5% in the South, 11.4% in the Midwest and 6.0% in the West, but there was a 2.4% increase in the Northeast. This year’s Most popular postcodes The report highlights the continued popularity of conveniently located postcode areas in the Northeast, which offer an attractive proposition due to their commuting distance to major economic centers.
What this means for buyers, sellers and the real estate market
Pending home sales, or contract signings, measure the first formal step in the home sale transaction, which is when the buyer and seller have agreed on price and terms. Pending home sales typically precede existing home sales by about one to two months and are a good indicator of market conditions. High mortgage rates and home prices have dampened buyer demand this summer. The recent improvement in mortgage rates is good news for the market, but many buyers are waiting for a more significant rate move.
As has been the case in recent years, today’s real estate market hinges on affordability. Although supply has improved significantly from last year and homes have been on the market longer, today’s home prices have not fallen significantly from last year’s levels and are only a few thousand dollars below the 2022 peak. As a result, many buyers, while eager, still cannot afford to participate in today’s market, and home sales, including pending home sales, are still lagging behind last year’s levels. Even if today’s market is out of reach, buyers can start preparing for a home purchase by do a bit of legworkfor example, by improving their credit score to ensure they get the lowest possible interest rate on a home loan.
