Sales of existing homes rose 1.3% in July from June to a seasonally adjusted annual rate of 3.95 million units, according to the National Association of Realtors. It was the first increase in five months.
Sales were 2.5% lower compared to the same period last year.
Sales saw the largest increases in the Northeast and remained stable in the Midwest. Prices also rose the most in the Northeast.
“Despite the modest improvement, home sales remain sluggish,” Lawrence Yun, NAR's chief economist, said in a statement. “But consumers are definitely seeing more options and affordability is improving due to lower interest rates.”
These sales are based on contracts that were likely signed in May and June, when mortgage rates were well above 7% on the popular 30-year fixed loan. Rates began to decline in July and are now around 6.5%.
Cash offers accounted for 27% of July sales, up from 26% a year earlier and much higher than the historical norm.
The supply of homes for sale continued to increase in July. At the end of the month, there were 1.33 million homes on the market, an increase of 0.8% from June and 19.8% more than in July 2023. At the current pace of sales, that represents four months' supply, slightly lower than in June.
However, the increased supply did little to cool home prices. The median price of an existing home sold in July was $442,600, up 4.2% year-over-year.
First-time buyers accounted for 29% of sales in July, unchanged from June but down from 30% in July 2023. Historically, these buyers account for about 40% of home sales, but affordability has been hit hard over the past two years by rapidly rising home prices and higher mortgage rates.
Now that rates are slightly lower, demand is starting to pick up. An independent report from Redfin, a real estate brokerage, found that requests for showings and other buyer services from Redfin agents rose 4% over the past week, reaching their highest level in two months.
Correction: An earlier version of this story misstated the time period for the decline in home sales.
