The Good Brigade/Getty Images; Illustration by Austin Courregé/Bankrate

The housing market turned around slightly in July 2024, seeing a slight increase in sales for the first time in four months, according to a new report from the National Association of Realtors (NAR). Existing home sales rose 1.3 percent from the previous month, marking the end of four consecutive months of declines, but still 2.5 percent lower than a year ago. Meanwhile, the median sales price for homes fell slightly from June’s all-time high, but still marked the highest median price ever recorded for the month of July, according to NAR chief economist Lawrence Yun.

High mortgage rates have contributed to the sluggish sales. While rates have thankfully stayed below the 8 percent mark that was briefly reached in October 2023, they are still between 6.5 and 7 percent. The average interest rate on a 30-year fixed-rate loan was 6.62 percent as of Aug. 21, according to Bankrate’s latest survey of major lenders. Combined with historically high prices, this means affordability challenges remain daunting for homebuyers.

“The fate of the housing market in the coming months will be determined in part by the direction of mortgage rates as well as the health of the overall economy,” said Mark Hamrick, senior economic analyst at Bankrate. “The market could benefit from a combination of tailwinds if these develop and sustain.”

Sales of existing homes are finally rising again

The existing home sales count includes all completed resales, including single-family homes, condos, townhomes and co-ops. According to NAR, the number of sales in July 2024 rose 1.3 percent month-over-month to an annual pace of 3.95 million transactions. While this is the first increase since the first quarter, it is still a 2.5 percent year-over-year decline.

“Despite the modest increase, home sales are still sluggish,” Yun said in a statement.

Regionally, the Northeast saw the largest sales increase, up 4.3 percent from June and 2.1 percent from July of the previous year. In the West, sales rose 1.4 percent both month-over-month and year-over-year. In the South, sales rose 1.1 percent from June, but were 3.8 percent below the year-ago figure. In the Midwest, sales were flat in July, down 5.2 percent from the year-ago figure.

Days on the market

In July, homes typically stayed on the market for 24 days, slightly more than in June (22 days) and July (20 days) of the previous year. Timing of sales is a critical factor at any time of year, but especially during the peak selling season in spring and summer.

Real estate prices reach new July record

The nationwide median sales price for existing homes was $422,600 in July. That’s slightly lower than June’s all-time high of $426,900, which is mostly seasonal, but it’s still a 4.2 percent increase from a year ago and the highest July median on record. This month’s increase marks 13 consecutive months of year-over-year price increases.

All four geographic regions again saw annual price increases in July. The West continued to have by far the highest median price at $629,500, up 3.4 percent from a year ago. In the Northeast, the median price rose 8.3 percent from a year ago to $505,100. The median price in the South rose 2.3 percent to $372,500, and the median price in the Midwest rose 4.5 percent to $321,300.

First-time buyers accounted for 29 percent of sales in July, no change from June but a slight decrease from the 30 percent in July of the previous year. Cash buyers accounted for 27 percent of sales in July, a slight increase from the 26 percent a year earlier.

Housing stock increases

The supply of homes for sale is slowly rising after being very low for an extended period. Total housing inventory – the total number of homes on the market for sale – was 1.33 million units at the end of July. That’s a modest 0.8 percent increase from June, but a significant 19.8 percent increase from a year ago. The figure represents 4.0 months of supply, which is approaching the five to six months typically required for a healthy, balanced market.

Despite last fall’s sharp rise in mortgage rates that kept many homeowners out of the market and discouraged them from selling, things may be looking up for homebuyers. “Consumers are definitely seeing more choice and affordability is improving because of lower rates,” Yun said.

Robert Frick, an economist at Navy Federal Credit Union, cautiously agreed. “It’s a glimmer of hope, but not a signal of a turnaround,” he said. “Home sales remain weak, but lower mortgage rates should encourage more potential sellers to back off and increase affordability somewhat.”