Home Sales Decline Again, Continuing Housing Slump

by Warren Seah

In July, home sales experienced a decline for the fourth time in five months, prolonging one of the most significant housing slumps in recent history.

According to the National Association of Realtors (NAR), sales of existing homes, which account for the majority of purchases, decreased by 2.2% in July compared to the previous month. This equated to a seasonally adjusted annual rate of 4.07 million, marking the slowest monthly sales pace since January and the slowest July pace since 2010.

Several factors have contributed to this decline, including high mortgage rates, near-record home prices, and limited inventory. In July, sales were down by 16.6% compared to the same period the previous year. Given that mortgage rates recently surpassed 7% to a two-decade high, it is expected that the sluggishness in home sales activity will persist for some time.

Lawrence Yun, NAR’s chief economist, highlighted two driving forces behind the current sales activity – inventory availability and mortgage rates. Unfortunately, both factors have not been favorable to buyers.

The Federal Reserve’s aggressive campaign to raise interest rates and combat inflation has resulted in upward pressure on mortgage rates. Additionally, the limited supply of homes has led to sustained high prices.

In July, the national median existing-home price saw a year-on-year increase of 1.9% to reach $406,700. This marked the fourth time on record that this figure exceeded $400,000.

Economists surveyed by The Wall Street Journal had anticipated a much milder decline of just 0.2% in July for sales of previously owned homes.

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