According to the National Association of Realtors, resale home sales rose 1.3 percent in July from June to a seasonally adjusted annualized rate of 3.95 million units, the first increase in four months.

Compared to the same period last year, sales were 2.5% lower.

Sales rose most in the Northeast, while they stagnated in the Midwest. Prices also rose most in the Northeast.

“Despite the modest increase, home sales are still sluggish,” said Lawrence Yun, NAR chief economist, in a press release. “But consumers are definitely seeing more choices and affordability is improving due to lower interest rates.”

These sales are based on contracts likely signed in May and June, when mortgage rates on the popular 30-year fixed loan were well above 7%. In July, rates began to decline and are now around 6.5%.

Cash offers accounted for 27% of sales in July, up from 26% a year earlier and far above the historical norm.

The supply of homes for sale continued to rise in July, with 1.33 million homes on the market at the end of the month, up 0.8% from June and 19.8% more than July 2023. At the current sales pace, that’s equivalent to four months’ supply, slightly less than June.

However, the increased supply did not contribute to a cooling of real estate prices.

First-time buyers accounted for 29% of sales in July, unchanged from June but down from 30% in July 2023. Historically, these buyers account for nearly 40% of home sales, but affordability has suffered greatly over the past two years due to rapidly rising home prices and higher mortgage rates.

With prices now a little lower, demand is starting to pick up again. A separate report from real estate brokerage Redfin found that requests for showings and other buying services from Redfin agents rose 4% last week to their highest level in two months.