Existing Home Sales Beat Expectations, Rise by 1.3 Percent in July

Lower mortgage rates have improved affordability, attracting buyers to the market.

A 'for sale' sign is displayed in front of a home in Miami on Feb. 23, 2023. Joe Raedle/Getty Images

Existing home sales slightly surpassed forecasts last month, encouraging sellers to put their properties up for sale.

Existing home sales increased by 1.3 percent in July from the previous month, “breaking a streak of four consecutive monthly declines,” the National Association of Realtors said in an Aug. 22 statement.

Home sales increased in three of the four major U.S. regions and “remained steady” in the Midwest, according to the statement.

“Despite the modest gain, home sales are still sluggish,” Lawrence Yun, the association’s chief economist, said. “But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.”

A total of 3.95 million existing homes were sold in July, “slightly exceeding” expectations, real estate marketplace Zillow said in an Aug. 23 statement.

“Existing home sales rebounded from a low point in June, indicating a return to a more typical pattern,” Zillow stated.

“As existing home sales are picking up, more homeowners are listing their properties for sale to keep up with demand, leading to a gradual increase in existing home inventories. However, the number of homes available at any given time is still lower than before the pandemic, which is keeping prices on the rise.”

Zillow said it expects “continued improvements in mortgage rates” during the summer months to drive more home sales.

However, it said, with the upcoming November presidential election and buyer hesitancy in entering the market because of expectations that the Federal Reserve will be lowering interest rates, the United States is entering a period of uncertainty that could affect the housing market.

“These factors may influence major decisions and have an impact on existing home sales as we near the end of the year,” Zillow stated.

Hesitant Buyers, Mortgage Rates

Real estate brokerage company Redfin also reported an increase in existing home sales for July. Nicole Stewart, a real estate agent with the company in Boise, Idaho, said many buyers got “excited” after mortgage rates dropped, leading to more activity in the housing market.

However, with rates at about 6.5 percent, people are now waiting to see if there will be more declines.

“A lot of people are also concerned about the political climate. They can afford to buy but have been holding off because it’s unclear where the country will be in six months. Though in reality, who is in the Oval Office probably won’t have much of an impact on the housing market,” Stewart said.

Redfin senior economist Elijah de la Campa said that while mortgage rates have fallen, they have not declined to such a level that would bring “tons of buyers off of the sidelines and drive up competition.”

The average mortgage rate on a 30-year fixed-rate mortgage was 6.46 percent for the week that ended on Aug. 22, down from the peak of 7.79 percent in late October 2023.

Sam Khater, chief economist at Freddie Mac, citing softer economic data, said he is expecting mortgage rates to “gently slope downward through the end of the year.”

The current 6.5 percent rate has “not been enough” to motivate prospective buyers to commit to making a purchase. Rates will have to fall by a percentage point to trigger more buying demand, he said.

During the annual Jackson Hole Economic Symposium on Aug. 24 to 26, Fed Chair Jerome Powell said the central bank plans to reduce its benchmark interest rates, which could end up pushing mortgage rates further down.

“The timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” he said.

The next meeting of the Fed is scheduled for Sept. 17 to 18.