2023 Existing Home Sales: The Struggle Persists
Existing home sales faced another setback in July, with a modest increase in inventory providing little relief from the ongoing challenges in the market.
According to the National Association of Realtors (NAR), existing home sales in July dropped to a seasonally-adjusted annual rate of 4.07 million units.
This represented a 2.2% decline from June and a substantial 16.6% decrease from July 2022.
During the same period, total housing inventory at the end of July increased slightly to 1.11 million units, which NAR reported as equivalent to a 3.3-month supply at the current sales pace.
In terms of pricing, the median existing-home price for all housing types in July reached $406,700, marking a modest 1.9% increase from July 2022.
The persistently challenging conditions in the existing home market have been influenced by several factors.
Notably, rising borrowing costs have cast a shadow over the sector, driven by a combination of higher interest rates and elevated home sale prices during the summer months.
Renowned economist Jeff Tucker commented on the situation, highlighting the typical transition that occurs in the housing market during July, as the vibrant spring homebuying season gives way to a slower summer period.
Even after seasonal adjustments, sales continued to decline.
The ever-increasing mortgage expenses have acted as a deterrent for potential buyers, exacerbated by the double impact of rising interest rates and escalating home prices.
Furthermore, potential buyers may be experiencing frustration from the limited choices available in the market, with only a handful of new listings coming to the forefront.
In contrast, newly-built homes are becoming a more substantial share of the available options, with builders sweetening deals by offering interest rate buydowns to attract determined buyers.
In conclusion, the July 2023 report on existing home sales underscores the persistent challenges facing the market, characterized by declining sales and increased inventory.
The impact of rising borrowing costs and limited listings continues to weigh on potential buyers, while newly-constructed homes are increasingly emerging as a viable alternative, thanks in part to attractive incentives provided by builders.