U.S. existing home sales fall for second straight month in July

U.S. existing home sales declined for a second consecutive month in July, reflecting persistent headwinds from elevated borrowing costs and limited housing supply.

The National Association of Realtors reported on Wednesday that sales of previously owned homes fell 2.2% from June to an annualized rate of 3.95 million units. The decline follows a 5.4% drop in June, marking the weakest two-month stretch since the start of 2024.

Economists surveyed by Reuters had expected a smaller decrease of 1.1%, underscoring the broader-than-anticipated softness in the housing market. On an annual basis, sales were down 16.6% from July 2023, the steepest year-over-year decline since November 2023.

The median existing-home price rose 4.2% year-over-year to $445,600, the highest July level on record, according to NAR data. The persistent rise in prices, despite weaker sales volumes, highlights the imbalance between robust demand and constrained supply.

Higher mortgage rates have weighed on affordability, with the average 30-year fixed-rate mortgage hovering near 7%, according to Freddie Mac. The elevated rates have deterred potential buyers, particularly first-time purchasers, from entering the market.

Inventory levels improved slightly, with unsold homes on the market at 3.2 months' supply at the current sales pace. While this represents a modest increase from June, it remains below the six-month supply typically associated with a balanced market.

Regionally, all four major U.S. regions recorded declines in July, with the West posting the largest drop at 3.8%. The Midwest saw the smallest decline at 0.6%.

The Federal Reserve's policy path remains a key variable for the housing sector. Market expectations for rate cuts have shifted in recent weeks, with traders now pricing in a higher likelihood of a September reduction. Any easing in borrowing costs could provide relief to prospective buyers and potentially stabilize sales activity.