Existing home sales in the US declined more than expected last month as rising prices and mortgage rates continued to weigh on homebuying activity, data from the National Association of Realtors showed Tuesday.
Sales were down 1.7% sequentially to a seasonally adjusted annual rate of 4.06 million units in July. The consensus was for a 1% decrease in a survey compiled by Bloomberg.
Single-family home sales retreated 1.9% month over month to 3.69 million units in July, while condominium and co-op sales were unchanged at 370,000 units, NAR data showed.
"A lack of homes for sale on the market has often been cited as the primary factor holding back the pace of sales," Jefferies Chief US Economist Thomas Simons said in a note e-mailed to. "That argument is losing steam, and it is becoming increasingly obvious that affordability for both new entrants and current owners with low mortgage rates is the primary thing dragging down housing market activity."
The median sales price of existing homes increased 2% on a yearly basis to $434,100 last month and represented the 37th straight month of annual gains, according to the NAR. In June, the median home price reached an all-time high, the NAR said last month.
US home price growth accelerated annually in May, though values dropped in real terms for a 12th straight month amid continued affordability headwinds, S&P Global (SPGI) division S&P Dow Jones Indices said late last month.
The average 30-year fixed mortgage rate increased to 6.54% in July from 6.49% the month prior, but was down from 6.72% a year earlier, the NAR said, citing Freddie Mac data.
"Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months," NAR Chief Economist Lawrence Yun said. "Year-to-date sales are up 2.4% and there's no doubt that the housing market would be thriving if average mortgage rates were to return near 6%."
Mortgage rates have expanded by about 70 basis points since March, but may come down later this year once the inflation impact of the Middle East war has "worked its way through the system," according to Simons.
"Tight supply and a large number of homeowners locked in to low rate mortgages from prior to 2021 are likely to keep the pace of home resales limited for a while to come," Simons said.
Last week, Zillow Group (Z, ZG) said US home sales in July logged their strongest annual gain for the year, though certain indicators suggested a slower second half. Previously, Redfin.com pointed to a slowdown in US homebuying demand amid elevated mortgage rates.
