Existing home sales slip 1.7% as mortgage rates top 6.69%

Existing-home sales slipped 1.7% in July to a seasonally adjusted annual rate of 4.06 million, as the 30-year fixed mortgage rate hit 6.69% — the highest in over a year — and record prices kept prospective buyers on the sidelines.

"Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months," Lawrence Yun, chief economist at the National Association of Realtors, said. "There's no doubt that the housing market would be thriving if average mortgage rates were to return near 6%."

The July pace came in slightly above the 4.05 million economists expected, according to FactSet, and was up 0.7% from a year earlier. The median U.S. sales price rose 2% year-over-year to $434,100, an unprecedented level for July. Single-family home sales fell 1.9% month-over-month to 3.69 million, though that was up 0.8% from July 2025, with the median price up 1.9% to $440,300. Condo sales were unchanged, with the median price up 2.2% to $371,800.

The housing market has been stuck near a 4-million annual sales pace for roughly three years, far below the historic norm of about 5.2 million. With the 30-year rate rising for five consecutive weeks — from 6.43% on July 2 to 6.69% on August 6, according to Freddie Mac — affordability remains the central constraint. First-time buyers accounted for 29% of July sales, down from 33% in June and well below the historical share of roughly 40%.

Inventory remains thin. There were 1.54 million unsold homes at the end of July, down 1.9% from June and 0.6% below a year earlier — well short of the roughly 2 million homes for sale that was typical before the pandemic. That translates to a 4.6-month supply at the current sales pace, versus the 5- to 6-month supply considered balanced.

Regional Divergence Widens as Northeast Prices Jump 5.2%

Sales rose 2% in the Northeast, where the median price jumped 5.2% year-over-year to $563,800, the fastest appreciation in the country. The Midwest fell 2%, the South dropped 4.1%, and the West was essentially flat. Affordability improved most sharply in the West, up 7.3%, followed by the South at 6.1%, the Midwest at 4.0%, and the Northeast at 1.5%.

Florida emerged as a standout, with Yun noting a "strong increase in home sales along with price recovering" — a reversal from this time last year when that market was in decline. The state's rebound shows how localized housing dynamics can diverge sharply from national trends, even when borrowing costs are similar across markets.

Rates, Not Demand, Are the Binding Constraint

Earlier in 2026, the 30-year mortgage dipped below 6% for the first time in 3.5 years, briefly offering relief before rates climbed back into the mid-6% range. The recent upward drift reflects expectations of higher inflation as oil prices surged following the U.S.-Iran conflict, pushing up long-term bond yields that lenders use to price home loans.

Home sales are still tracking 2.4% above the first seven months of 2025, suggesting the market is stabilizing rather than deteriorating. But with mortgage rates at their highest level in over a year and inventory still constrained, the path to a more active market runs through lower borrowing costs. If rates were to return near 6%, Yun said, the housing market would likely see a meaningful pickup in activity.

The implications extend beyond the housing sector. Homebuilders, mortgage lenders, and real estate investment trusts all face headwinds from the persistent affordability squeeze. A sustained period of elevated rates could keep new construction muted, further constraining supply and reinforcing the price floor that has made entry increasingly difficult for first-time buyers.

This article is for informational purposes only and does not constitute investment advice.