US Existing Home Sales Decline to Lowest Level in 2023
Existing home sales in the United States experienced a significant decrease in July, falling to their lowest annual rate since January, according to a report released by the Commerce Department. The report revealed that existing home sales dropped by 2.2 percent to an annual rate of 4.07 million in July, following a 3.3 percent decline in June to an annual rate of 4.16 million. Economists had anticipated a slight decrease to an annual rate of 4.15 million. This decline marks the fourth time in the past five months that existing home sales have fallen.
The Chief Economist of the National Association of Realtors (NAR), Lawrence Yun, pointed out two key factors driving this decline in sales activity: inventory availability and mortgage rates. Unfortunately, both factors have been unfavorable to buyers. Housing inventory at the end of July stood at 1.11 million units, representing a 3.7 percent increase from June. However, it was still down 14.6 percent from the previous year. The unsold inventory translated to 3.3 months of supply at the current sales pace, slightly up from 3.1 months in June and 3.2 months in July 2022.
In terms of home prices, the report indicated that the median existing-home price in July was $406,700, reflecting a 1.9 percent increase from the same month a year ago. Yun highlighted that most homeowners continue to benefit from the substantial wealth gains of recent years, showing little concern about potential home price declines. However, renters are becoming increasingly worried about affordability challenges due to high interest rates.
Looking at the breakdown of sales by property type, single-family home sales experienced a 1.9 percent decline to an annual rate of 3.65 million in July. Meanwhile, existing condominium and co-op sales plummeted by 4.5 percent to an annual rate of 420,000.
Industry experts will now closely monitor the upcoming report by the Commerce Department on new home sales in July, which is set to be released on Wednesday. The findings will provide further insights into the overall health and performance of the housing market.
In conclusion, the latest report on US existing home sales has confirmed the downward trend in the housing market, with sales reaching their lowest level of the year so far. The limited availability of inventory and high mortgage rates have presented challenges for potential buyers. Despite this, homeowners continue to enjoy substantial wealth gains, while renters face growing concerns over affordability. The upcoming report on new home sales will shed more light on the market’s direction, and experts hope for improved conditions in the future to support a stronger real estate sector.
