US Existing Home Sales Pace Hits Record Low in July

• US existing home sales pace has been stuck at around 4 million annual units for three years.
• Median sales price hit $434,100 in July, a 2% increase from last year's figure.
• Benchmark 30-year fixed rate mortgage rate climbed to 6.69%, its highest level in over a year.
• Home inventory levels remain well below historical norms, with a 4.6-month supply at the current sales pace.

The root cause of the US housing market's struggles lies in the rising mortgage rates and low inventory levels.

The US existing home sales pace has been stuck in neutral for three years, hovering around 4 million annual units. This is far short of the historic norm, which averages out to around 5.2 million homes sold per year. The National Association of Realtors reported that July's sales fell 1.7% from June to a seasonally adjusted rate of 4.06 million units. While this is slightly above economists' expectations, it still marks another month of sluggish sales in the US housing market.

The ongoing decline in home sales has been exacerbated by record prices and high mortgage rates. The median sales price hit $434,100 in July, a 2% increase from last year's figure. Home prices have risen for 37 consecutive months, with no signs of slowing down. This trend is particularly concerning given the low levels of home inventory, which stood at 1.54 million unsold units at the end of July.

The root cause of the US housing market's struggles lies in the rising mortgage rates and low inventory levels. The benchmark 30-year fixed rate mortgage rate has climbed to 6.69%, its highest level in over a year. This has made it increasingly difficult for prospective homebuyers to secure financing, further stifling sales. Meanwhile, home inventory levels remain well below historical norms, with a 4.6-month supply at the current sales pace. Traditionally, a balanced market is characterized by a 5- to 6-month supply of homes.

The Northeast region continues to experience the fastest price growth, with prices jumping 5.2% year-over-year. This is largely driven by a shortage of inventory in the area. The National Association of Realtors noted that 29% of sales were first-time homebuyers, down from 33% in June but up slightly from last year.

The US housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied homes were essentially flat last year, stuck at a 30-year low. The current sales pace is far short of the historic norm, which averages out to around 5.2 million homes sold per year. This has significant implications for lawyers advising clients on commercial or residential property transactions.

The ongoing decline in home sales may impact their clients' ability to sell or purchase properties. Additionally, the increasing mortgage rates and rising home prices may create compliance exposures for lenders and financial institutions.

Lawyers advising clients on commercial or residential property transactions should be aware of the ongoing decline in US existing home sales, which may impact their clients' ability to sell or purchase properties. Additionally, the increasing mortgage rates and rising home prices may create compliance exposures for lenders and financial institutions.

Source: Original reporting via AP