The one-month improvement is likely the result of lower mortgage rates and an increase in inventory.
Sales of existing homes broke a four-month slide in July, rising by 1.3%, the National Association of Realtors said on Thursday.
Prices continued their increase for the 13th straight month with the median sales figure rising to $422,600. Sales were at an annual level of 3.95 million, 2.5% below where they were a year ago.
“Easing inflation helped accelerate the decline in mortgage rates in mid-July and rates currently hover near 15-month lows,” said Danielle Hale, chief economist at Realtor.com. “This is likely to bode well for buyers in the fall – a typically advantageous season for home shoppers.”
“Already, we see variation across the country in housing activity. Inventory recovery in the South and West has helped soften relatively high asking prices in these regions,” Hale added. “At the same time, affordable markets in the Northeast and Midwest continue to draw the attention of value-conscious home shoppers.”
The housing sector was one of the strongest coming out of the COVID-19 pandemic but slumped in the past year or so as the Federal Reserve raised interest rates to their highest levels in two decades. Mortgage rates followed, topping 7% before receding somewhat recently to the 6% range. That has stirred some interest both among prospective buyers and those who are looking to refinance.
“Despite the modest gain, home sales are still sluggish,” said NAR Chief Economist Lawrence Yun. “But consumers are seeing more choices, and affordability is improving due to lower interest rates.”
One result of the slight easing of mortgage rates has been an increase in the inventory of homes for sale. There are currently four months of unsold inventory, a supply that is up 19.8% from a year ago.
“This is a glimmer of hope, not a turnaround signal,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Home sales remain weak, but lower mortgage rates should bring more potential sellers off the sidelines and increase affordability somewhat.”
Democratic presidential nominee Vice President Kamala Harris has made housing affordability a key part of her economic plan and has promised a $25,000 incentive for first-time buyers. Economists have greeted that with mixed reviews, as some believe it would only increase prices with sellers expecting to recoup some of it.
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