The NAR's July existing home sales report featured encouraging signs for inventory and median sales price. But progress is not evenly spread.
The July existing home sales statistics brought welcome news for homebuyers fatigued by a record-setting summer housing market.
The inventory of unsold homes reached 1.32 million units in July, up 7.3% from June, according to the National Association of Realtors (NAR) Existing-Home Sales report.
Also encouraging is July’s 2.6-month housing supply, up slightly from 2.5 months’ supply in June. The higher the months’ supply, the better for buyers. It was a small but significant win in a year when homebuyers have been pressed on all sides.
Perhaps even more welcome was a decline in the median price of existing home sales. The July median fell to $359,900 from June’s $363,300 -- the first decrease since January 2021.
The July median existing home sales price was “only” up 17.8% from last year, a step toward normal after year-over-year gains above 23 percent in May and June. July marked 113 straight months of year-over-year price gains.
Slow and steady improvements in housing
| Metric | June | July |
|---|---|---|
| Available homes | 1.25 million | ↑ 1.32 million |
| Months’ supply | 2.5 | ↑ 2.6 |
| Median home price | $363,300 | ↓ $359,900 |
Much of the 2020-2021 home price run-up is due to fierce competition over record-low inventory. Efforts to increase housing supply have been hampered by material and labor shortages due to the pandemic.
According to the Census Bureau, housing starts fell 7% from June to July to a seasonally adjusted annual rate of 1,534,000. However, there were a few silver linings. Building permits increased 2.6% from June to July and housing completions rose 5.6% to a seasonally adjusted annual rate of 1,391,000.
While the inventory gains are encouraging, they are not even spread, according to NAR’s chief economist Lawrence Yun.
"We see inventory beginning to tick up, which will lessen the intensity of multiple offers," said Lawrence Yun, NAR's chief economist. "Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren't seeing as much growth because there are still too few starter homes available."
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The shortage of affordable starter homes is showing up in buyer demographics. The share of first-time homebuyers decreased from 31% to 30% from June to July, down from 34% in July 2021.
Meanwhile, individual investors and second-home buyers increased their share from 14% in June to 15% in July. And all-cash accounted for 23% of transactions in July, up from 16% last year.
The uneven housing supply is also appearing in the price range data. At 43%, homes priced between $250,000-$500,000 make up a majority of all sales. Yet the sales in this price bracket decreased 1.1% year over year.
Sales for homes priced above $500,000 are soaring with million dollar homes leading the way.
| Price range | Percent change in sales from last year |
|---|---|
| $500k to $750k | +32.3% |
| $750k to $1M | +53.1% |
| $1M+ | +59.1% |
A bump in inventory and a dip in the median existing home sales price are encouraging signs, but they haven’t amounted to significant relief for first-time and low-income homebuyers.