Existing home sales fall again — except in the West
NAR reported a 2.2% national decline in sales in July, but the West bucked the trend, and more first-time buyers entered the market.
Key points:
- July’s decline comes after existing home sales fell by 3.3% in June.
- Sales were down most significantly in the Northeast but rose in the West.
- NAR’s report comes as several other major players have released revised home price predictions for 2023 and beyond.
For the fifth time this year, the National Association of Realtors has reported a dip in month-over-month existing home sales.
In July, existing home sales slid 2.2% to a seasonally adjusted annual rate of 4.07 million, the report indicated, and sales were down by 16.6% from a year ago. July's monthly decline is a slight improvement from June, when existing home sales fell 3.3%.
Even as sales decline, prices continue to rise. The median sale price for existing homes in July was $406,700 — up 1.9% year-over-year. It's only the fourth time that the median monthly sale price had topped $400,000, and was slightly below the June 2022 peak of $413,800.
The decline in sales can be attributed to the usual suspects: tight inventory and high borrowing costs. NAR Chief Economist Lawrence Yun noted that "both have been unfavorable to buyers" and are the primary drivers for the dip in existing sales in July.
Total housing inventory at the end of July stood at 1.11 million units, or roughly a 3.3-month supply. While this figure is up 3.7% from the previous month, inventory is down by 14.6% year-over-year.
Sales fell regionally, except in the West
The Northeast posted the biggest decline in existing home sales, which fell 5.9% from June, while also claiming the largest annual increase in home prices: up 5.5% from a year ago.
Both the Midwest and South experienced more modest dips in home sales and saw smaller gains in homes prices than the Northeast.
The West stood out as the one region to post an increase in existing home sales, which were up 2.7% from June. Median prices in the region were unchanged year-over-year and were the highest in the country at $610,500.
More first-time buyers entered the market
When looking closer at buyer demographics in July, first-time homebuyers represented 30% of existing home sales, which was up from both the previous month and the same period a year ago. Cash buyers claimed 26% of July existing home sales, which was the same figure from the previous month. Individual investors or second-home buyers made up 16% of July home sales.
The latest stats from NAR come as researchers from across the industry have started revising their forecasts for 2023 and beyond. Just in the last week, researchers from Zillow, Freddie Mac and Goldman Sachs have issued more optimistic predictions on home values and prices.
Zillow said it expects home values — including homes that are not for sale — to rise by 5.8% this year, while Goldman Sachs updated its forecast for 2023 home prices from a decline of 2.2% to a gain of 1.8%. The more bearish Freddie Mac is "more optimistic than earlier in the year" but still only predicts that home prices will rise by 0.8% in the next 12 months.