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Existing home sales rise in July, home prices rise for 13th straight month while mortgage rates fall

Existing home sales rose in July as homebuyers returned to the market and mortgage rates were at their lowest levels since February.

Existing home sales rose 1.3 percent from June to a seasonally adjusted annual rate of 3.95 million, the National Association of Realtors said Thursday, halting a four-month decline in sales that began in March. Economists surveyed by Bloomberg expected existing home sales to reach a pace of 3.94 million in July.

On an annual basis, resale home sales fell 2.5 percent in July. The median home price rose 4.2 percent to $422,600 in July, the 13th consecutive month of annual price increases.

A combination of limited supply, rising prices and high mortgage rates continues to weigh on housing activity.

“Despite the modest increase, home sales are still sluggish,” NAR chief economist Lawrence Yun said in a statement. “But consumers are definitely seeing more choices and affordability is improving due to lower interest rates.”

Read more: Is this a good time to buy a home?

Lower mortgage rates are likely to ease the challenges homebuyers face in making their properties affordable in the coming months, but Thursday's report shows that the price shock as a feature of the U.S. housing market is not going away.

In the Northeast, home sales rose 4.3% month-over-month to an annualized rate of 490,000 in July, while the average home price was $505,100, up 8.3% year-over-year.

In the South, sales increased 1.1% compared to June, while the median price in the South was $372,500, up 2.3% year over year.

In the West, existing home sales increased 1.4% month-over-month, with the median price at $629,500, up 3.4% from July 2023.

Meanwhile, sales in the Midwest remained unchanged from June at 920,000 units, with homes selling for an average price of $321,300, up 4.5% from July 2023.

The inventory of unsold existing apartments rose slightly by 0.8% month-on-month to 1.33 million units at the end of July, which corresponds to four months' supply at the current sales rate. At least six months are needed for a balanced market.

The increased activity may be due in part to lower mortgage rates. According to Freddie Mac, the average rate on 30-year fixed-rate mortgages was 6.49 percent last week.

Although mortgage rates are lower than they were a year ago, some prospective homeowners are still hesitant to venture back into the real estate market, anticipating even lower rates – a dynamic that has some companies cautious about the prospects for a significant economic recovery in the coming months.

“We're hoping that the lower interest rates, the declines that we're seeing, will have a dual effect: One, it will ease the pressure on consumers, and the other will boost activity in existing home sales. But the reality is that the majority of homeowners, when we look at the lock-in effect, are still at 4%,” Brandon Sink, CFO of Lowe's (LOW), said Tuesday during the company's second-quarter earnings call.

“So even if we see some decline, [in mortgage rates]we believe there may still be some reluctance to get involved.”

Dani Romero is a reporter at Yahoo Finance. Follow her on X @daniromerotv.

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