The housing market continues to cool amid high mortgage rates, low inventory and rising property insurance rates.
Despite a sharp drop in home sales compared to the year-earlier period, the median existing-home sales price rose 1.9% from one year ago to $406,700. It was the fourth time the monthly median sales price exceeded $400,000, according to the NAR.
While all regions saw sales activity decline, the Northeast region saw the biggest drop in home sales, with existing-homes sales down 5.9% month over month and 23.8% compared to July 2022. The median price for a home was $467,500, up 5.5% a year ago. By contrast, the West saw existing-home sales increase 2.7% since June, to an annual rate of 770,000 in July, down 12.5% from the prior year. Median home prices there were roughly unchanged from the same period in 2022.
Elevated mortgage rates and low inventory
As of August 17, mortgage rates surpassed 7% as U.S. bond yields hit their highest level since 2008. Average mortgage rates rose by about a half percentage point in May and June, pricing some buyers out and limiting closed sales in July.
With supply remaining low — with less than three months of supply nationally — some buyers may continue to rent, especially in markets where rents are falling, said Lisa Sturtevant, chief economist at Bright MLS.
Despite market pressures, however, Zillow Senior Economist Jeff Tucker suggested that price trends are “swinging the pendulum of negotiating power back in favor of those buyers who remain in the hunt.”
Others say it will take time for home prices to drop.
Realtor.com Chief Economist Danielle Hale said consumer incomes will need to catch up for the market to recover next year.
“Fortunately, inflation is ebbing, and a further decline in July asking rents will likely help keep that trend on track,” he added.
Homes are sitting on the market somewhat longer. Properties typically remained on the market for 20 days in July, up from 18 days in June and 14 days in July 2022, according to the NAR.