Home Prices Rise as Inventory Shortages Continue
Simonforstock / Adobestock
For the fourth time, the median existing-home sales price climbed above $400,000, according to the National Association of Realtors (NAR); in July, it reached $406,700, a 1.9% year-over-year increase. Across the country, prices rose in the Northeast, Midwest, and South but remained stable in the West. According to Lawrence Yun, chief economist for the NAR, most homeowners are benefiting from the price increases, as their wealth continues to grow. “However,” he added, “many renters are concerned as they’re facing growing affordability challenges because of high interest rates.”
Two Market Factors Slowing Home Sales
Prices might have been on the rise in July, but overall existing-home sales were down. Month-over-month sales increased in the West but fell in the Northeast, Midwest, and South, while all four sales regions posted year-over-year sales declines. The two factors that are driving home sales—inventory availability and mortgage rates—have been unfavorable to buyers, according to Yun. Mortgage rates have been on the rise, with the 30-year fixed-rate mortgage rate hitting above 7%, compared with just 5% a year ago. “Retreating mortgage rates will bring more buyers and sellers to the market and get Americans moving again,” said Yun.
The other factor impacting sales figures—housing inventory—saw a slight month-over-month improvement. The total housing inventory at the end of July increased 3.7% from June to 1.11 million units. However, this was down 14.6% from a year earlier. At the current sales pace, this level of inventory would supply the market for 3.3 months, up from 3.1 months in June and 3.2 months in July 2022. Inventory was also moving quickly. The average property remained on the market for 20 days in July, according to the REALTORS Confidence Index; this was up from 18 days a month ago and 14 days a year ago. Of all the homes sold in July, 74% were on the market for less than 30 days.
First-Time Buyers Reaches 30%
More first-time buyers are finding their way into the market; this group of buyers accounted for 30% of all purchases in July, up from 27% in June and 29% in July 2022. According to the NAR “2022 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 26%, the lowest on record. All-cash sales, meanwhile, accounted for 26% of all sales in July, unchanged from a month earlier and up from 24% from a year earlier. Individual investors and second-home buyers—two groups who tend to pay in cash—were responsible for 16% of all purchases in July, down from 18% a month ago but up from 14% a year ago. At 1%, distressed sales in July were stable both month over month and year over year.
Regional Sales Breakdown
Northeast: Existing-home sales rate of 480,000; down 5.9% from June 2023 and 23.8% from July 2022. Median sales price: 467,500, up 5.5% from July 2022.
Midwest: Existing-home sales rate of 960,000; down 3% from June 2023 and 20% from July 2022. Median sales price: $304,600, up 3.9% from July 2022.
South: Existing-home sales rate of 1.86 million; down 2.6% from June 2023 and 14.3% from July 2022. Median sales price: $366,200, up 1.7% from July 2022.
West: Existing-home sales rate of 770,000; up 2.7% from June 2023 but a decrease of 12.5% from July 2022. Median sales price: $610,500, unchanged from July 2022.