U.S. Existing-Home Sales See First Increase in Five Months: What’s Driving the Change?
After months of sluggish market activity, U.S. existing-home sales have finally shown a positive shift. According to the National Association of REALTORS® (NAR), sales of previously owned homes increased by 1.3% in July, bringing the seasonally adjusted annual rate to 3.95 million units. This uptick comes as a welcome surprise, exceeding economists' expectations and breaking a five-month trend of declining sales.
What’s Behind the Recent Increase?
Several factors have contributed to this rebound, with two of the biggest drivers being lower mortgage rates and an increase in housing supply. As mortgage rates dropped slightly, more potential buyers felt confident enough to enter the market. At the same time, rising inventory levels provided more options for those looking to purchase a home.
Key Market Highlights:
-
New Listings Surge: New listings saw a significant increase, particularly for condominiums. Single-family homes saw a 40.7% increase in listings, while condo listings skyrocketed by 74.7%. This added inventory gave buyers more choices and contributed to the increase in sales.
-
Pending Sales Dip: Despite the positive sales growth, pending sales—a key indicator of future activity—showed a decline. Pending sales for single-family homes dropped 15.5%, and condo sales fell by 20.3%. This could signal some buyer hesitation moving forward.
-
Inventory Levels Rise: Inventory saw a substantial rise, with single-family home supply growing by 68.1% and condo inventory surging by a whopping 275.9%. Nationally, total housing inventory edged up 0.8% from the previous month, reaching 1.33 million units by August. This represents a 4.0-month supply at the current sales pace.
Prices and Market Competition
Home prices continue to rise due to high demand and limited supply. The median sales price for single-family homes jumped by 10.4%, reaching $1,325,000, while condos saw a 33.3% increase, pushing the median price to $1,000,000.
The nationwide median existing-home price rose 4.2% year-over-year to $422,600. This marks the 13th consecutive month of year-over-year price increases, showing that despite rising inventory, demand continues to outpace supply.
Days on Market and Months Supply
Homes are sitting on the market longer compared to earlier in the year. For single-family homes, the average days on market increased by 25.3%, while condos saw a 47.2% rise. The months supply of inventory has also expanded, increasing by 72.7% for single-family homes and an astounding 334.6% for condos.
What’s Next for the Market?
While the recent increase in sales is encouraging, challenges remain. Inventory is up nearly 20% from the same time last year, but demand still exceeds supply, pushing prices higher and keeping competition fierce. As we move forward, the balance between rising inventory and steady demand will be key in determining whether prices continue their upward trend or begin to stabilize.
For now, this market shift offers a glimmer of hope for buyers and sellers alike, but it remains to be seen whether the momentum will continue in the months ahead. Keep an eye on mortgage rates, housing supply, and market trends to stay informed and make the best decisions in this evolving landscape.
