Supply Grew in July, Attracting More Buyers

Existing home sales increased in July, marking the second consecutive month of increases amid growing inventory. CNBC says this increase in sales likely comes from the uptick in supply. Though inventory remains 12% lower compared to July 2020, it's a smaller decline than seen in recent months. Still, demand continues to outweigh supply, pushing home prices up and keeping the market competitive. Compared to June, sales in July increased by 2% and were 1.5% higher than July 2020. The median price of an existing home sold in July was $359,900, a 17.8% increase compared to the year before. 

“The housing sector appears to be settling down,” said Lawrence Yun, chief economist for the Realtors. “The market is less intensely heated as before.”

It may be cooling, but it still appears to be competitive. Homes are spending, on average, just 17 days on the market. First-time buyers represented just 30% of the market, whereas they are usually around 40% historically. Nearly a quarter of all buyers are using all cash, also a higher share than normal.

The latest read on sales of newly built homes from June showed a sharp decline both monthly and annually, according to the U.S. Census. That data set is based on signed contracts, so it is looking at roughly the same activity as the July data on existing homes. Newly built homes come at a price premium to similar-sized existing homes, and builders say they are now seeing even more buyers unable to afford what they would like.

Mortgage rates didn’t move much throughout May and June, when the bulk of these deals were made, but they did fall more sharply in July. That, in addition to increasing supply, could help boost sales at least slightly in the coming months. Mortgage applications to purchase a home, however, continue to run at a far slower pace that a year ago, according to the Mortgage Bankers Association.

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