Home sales slide in July as high mortgage rates, rising prices sideline homebuyers

Sales of previously occupied US homes slowed again in July as record prices and the highest mortgage rates in a year prove to be an insurmountable hurdle for many prospective homebuyers.Existing home sales fell 1.7% last month from June to a seasonally adjusted annual rate of 4.06 million units, the National Association of Realtors said Tuesday.That’s slightly above the 4.05 million pace economists were expecting, according to FactSet.July sales, however, were up 0.7% compared with last year.Home prices continued to rise, hitting unprecedented levels for July.

The median sales price increased 2% from a year earlier, to $434,100.Last week, mortgage buyer Freddie Mac reported that the benchmark 30-year fixed rate mortgage rate rose to 6.69%, its highest level in just over a year.It was the fifth consecutive week that the average rate rose, marking the latest strain for prospective homebuyers who are facing steep borrowing costs.“Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months,” said Lawrence Yun, NAR’s chief economist.“There’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%.”Home sales have been mostly hovering close to a 4-million annual pace for about three years, far short of the historic norm that is closer to 5.2 million.

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The US housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows.Sales of previously occupied homes were essentially flat last year, stuck at a 30-year low.Sales remain sluggish as mortgage rates have mostly trended higher in the months since the war between the US and Iran started.

Expectations of higher infl...