Existing home sales fell 1.7% in July from June to a seasonally adjusted annual rate of 4.06 million units, according to the National Association of Realtors, though sales still managed to rise 0.7% from a year earlier. The median sales price climbed 2.0% year over year to a record $434,100, the 37th consecutive month of annual price gains. Inventory of unsold homes dropped to 1.54 million units, down 1.9% from June, translating to a 4.6-month supply against a traditionally balanced market range of five to six months. NAR Chief Economist Lawrence Yun described the market as remarkably stable given the rate backdrop, adding that year-to-date sales remain up 2.4%.
The regional breakdown shows a market that is not moving uniformly. Month over month, sales rose in the Northeast, held flat in the West, and declined in the Midwest and South, while year over year sales rose in the Midwest and West and were flat in the Northeast and South. Northeast prices are climbing fastest of any region, up 5.2% year over year, a function of that region’s persistent inventory shortage. First-time buyers accounted for 29% of transactions, down from 33% in June but slightly above last July’s 28%, suggesting affordability pressure eased marginally even as the mortgage rate backdrop worsened. NAR’s Housing Affordability Index actually improved to 103.3 from 98.3 a year earlier, with the West posting the largest affordability gain at 7.3%, a reminder that affordability and transaction volume do not always move in lockstep month to month.
The rate environment is the dominant variable shaping this data. NAR pegged the average 30-year fixed mortgage rate at 6.54% in July, up from 6.49% in June, and Freddie Mac’s more current weekly survey has since pushed that figure to 6.69%, a fifth consecutive weekly increase and the highest level of 2026. That climb is happening against a backdrop where the Fed’s policy path remains a live question for markets, and housing has historically been one of the more rate-sensitive corners of the economy to respond to shifts in that path. With record home prices persisting alongside rising financing costs, the affordability math continues to squeeze the marginal buyer even in a market NAR characterizes as stable rather than deteriorating.
The open question is whether stability holds if rates keep grinding higher into the fall selling season. Early signals are mixed. HousingWire data on weekly single-family sales showed an 11.8% week-over-week jump for the week ending August 7, but pending home sales, a forward-looking measure of signed contracts, fell 3.9% over the same week, pointing to softer closings ahead. Yun’s own framing, that the market would be thriving if rates returned near 6%, underscores how much of the current sluggishness is a rate story rather than a demand or supply story. NAR’s pending home sales index and the next several weeks of Freddie Mac rate data will be the more useful signals for whether July’s slowdown is a blip or the start of a longer-running deceleration heading into the traditionally slower fall and winter months.
Disclosure
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