US existing home sales rose more than expected in July, reversing four straight monthly declines, as improved supply and falling mortgage rates offered hope that activity could pick up in the coming months.
Home sales rose 1.3% last month to a seasonally adjusted annual rate of 3.95 million units, the National Association of Realtors said Thursday.
Economists polled by Reuters had forecast home resales to rise at a rate of 3.93 million units.
Home resales, which make up a large portion of housing sales, fell 2.5% on a year-over-year basis in July.
The median existing home price rose 4.2% from a year ago to $422,600. House prices rose in all four regions.
Home sales are calculated at the closing of a contract.
Sales in July likely reflected contracts signed in the previous two months, when the average popular 30-year fixed-rate mortgage rate hovered around 7.0%.
The average rate for a 30-year fixed-rate mortgage was 6.49% last week, near a 15-month low and more than half a percentage point lower than the same time last year, data from the agency showed of Freddie Mac mortgage finance.
It has softened from a six-month high of 7.22% in early May, amid signals from the Federal Reserve that it will deliver a long-awaited interest rate cut in September.
“Despite the modest gain, home sales are still sluggish,” said Lawrence Yun, NAR’s chief economist. “But consumers are definitely seeing more choice and affordability is improving because of lower interest rates.”
Sales rose 1.1% in the densely populated south.
They were unchanged in the Midwest, which is considered the most affordable region.
Sales rose 4.3% in the Northeast and rose 1.4% in the West.
Inventory grows again
Housing inventory rose 0.8% to 1.33 million units last month. The supply increased by 19.8% from a year ago.
A rise in insurance premiums across the country as weather-related claims increase is forcing some homeowners to put their properties on the market.
However, entry-level homes remain in short supply and there is not enough new construction.
The government reported last week that single-family homebuilding fell to a 16-month low in July, likely weighed down by Hurricane Beryl and a glut of new homes, while permits for future construction also eased. Many homeowners have mortgage rates below 5%.
At the pace of July sales, it would take 4 months to exhaust the current inventory of existing homes. This was up from 3.3 months a year ago.
A supply of four to seven months is seen as a healthy balance between supply and demand.
Properties typically sat on the market for 24 days in July compared to 20 days a year ago.
First-time buyers accounted for 29% of sales versus 30% a year ago.
This percentage remains below the 40% that economists and realtors say is necessary for a strong housing market.
Cash sales accounted for 27% of transactions, up from 26% a year earlier. Troubled sales, including cash liabilities, represented 1.0% of transactions, virtually unchanged from a year ago.
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