U.S. Home Sales Slow in July Amid Record Prices and High Mortgage Rates
Sales of previously owned homes in the United States decreased in July. Record high prices and rising mortgage rates pose significant challenges for many potential homebuyers. The National Association of Realtors (NAR) reported on Tuesday that existing home sales dropped 1.7% from June to a seasonally adjusted annual rate of 4.06 million units. This figure slightly exceeds economists’ expectations of 4.05 million, according to FactSet.
Despite the monthly decline, July sales were up 0.7% compared to the previous year. Home prices continued to reach new heights, with the U.S. median sales price rising 2% from a year earlier to $434,100. In June, median prices peaked at $442,800, marking an all-time high for any month since 1999. Home prices have seen year-over-year increases for 37 consecutive months.
Last week, Freddie Mac reported the 30-year fixed-rate mortgage rose to 6.69%, its highest level in over a year. This marks the fifth straight week of increases, creating more challenges for potential buyers due to high borrowing costs. Carl Weinberg, chief economist at High Frequency Economics, noted the difficult market conditions, stating, “No one who has a home already can afford to sell it. People with ultra-low COVID-era mortgages cannot afford to give them up. If no one is selling, no one can be buying, and inventories are low.”
Home sales have hovered near a 4-million annual pace for about three years, a figure well below the historical average of around 5.2 million. The decline in the U.S. housing market began in 2022 when mortgage rates increased from pandemic-era lows. Previously occupied home sales remained nearly flat last year, hitting a 30-year low.
Sales continue to struggle as mortgage rates trend higher since the conflict between the U.S. and Iran started. Rising expectations of inflation, driven by surging oil prices, have increased long-term bond yields, which lenders use as a benchmark for home loan pricing. As a result, mortgage rates have climbed, and home inventory levels lag behind historical norms.
At the end of last month, there were 1.54 million unsold homes, representing a 1.9% decrease from June and 0.6% less than the previous July, according to NAR. Pre-pandemic levels typically saw around 2 million homes for sale. July’s month-end inventory equates to a 4.6-month supply at the current sales pace. Generally, a 5- to 6-month supply indicates a balanced market between buyers and sellers.
In the Northeast, prices continue to rise more quickly than other regions, increasing by 5.2% year-over-year due to a shortage of inventory. The NAR also reported that first-time homebuyers accounted for 29% of sales, down from 33% in June but slightly up from 28% in July 2025. Historically, first-time buyers constitute around 40% of home sales.