By Safiyah Riddle
(Reuters) – Existing home sales in the US fell to a six-month low in July as homeowners tied to low-cost mortgages refrained from selling their properties with the cost of new mortgages on another home at its highest level in decades.
However, that limited supply caused prices to move higher on a yearly basis for the first time since January.
Existing home sales fell 2.2% in July to a seasonally adjusted annual rate of 4.07 million units, the lowest since January, from an unrevised 4.16 million units in June, the National Association of Realtors said. Tuesday. Economists polled by Reuters had predicted that home sales would see little change at 4.15 million units.
Sales declined in the Northeast, Midwest and South, but increased in the West. All regions experienced annual revenue declines.
Home resales, which account for a large portion of US home sales, fell 16.6% year-on-year in July.
Home prices have bottomed out after being squeezed by the Federal Reserve’s aggressive rate hikes, but the continued shortage of homes for sale could limit any upturn as many potential buyers are forced to exit the market.
Mortgage rates recently rose back to their highest levels in decades, with the average rate on the popular 30-year, fixed-rate mortgage rising above 7% last week, according to mortgage financing giant Freddie Mac.
There were 1.11 million owned homes on the market last month, up 3.7% from a month earlier but down 14.6% from July 2022. At the July sales rate, it would have been 3 .3 months to exhaust the current stock of existing homes, compared to 3.2 months a year ago.
A supply of four to seven months is seen as a healthy balance between supply and demand. The median price of existing homes rose 1.9% from a year earlier to $406,700 in July, the fourth time it has surpassed $400,000.
“Two factors are driving current sales activity: inventory availability and mortgage interest,” said Lawrence Yun, NAR chief economist. “Unfortunately, both were unfavorable to buyers.”
Property typically remained on sale for 20 days in July, compared to 14 days a year ago. Seventy-four percent of homes sold in July were on the market for less than a month. New buyers accounted for 30% of sales, compared to 29% a year ago.
Cash sales accounted for 26% of transactions compared to 24% a year ago. Distressed sales, including bankruptcies, accounted for 1% of transactions, essentially unchanged from June and the prior year.
(Reporting by Safiyah Riddle; Editing by Paul Simao)
