US existing home sales post second straight monthly decline in July

Existing home sales in the U.S. declined for the second consecutive month in July, according to the National Association of Realtors. Sales fell 1.7% to a seasonally adjusted annual rate of 4.06 million units. Economists had predicted a slight decline to 4.05 million units. The recent drop in sales can be attributed to higher mortgage rates and limited housing inventory.

Mortgage rates have surged 71 basis points since the war in the Middle East began in February, reaching an average of 6.69% last week. This increase has deterred some homeowners from selling, exacerbating the housing shortage. Sales decreased in the Midwest and South, while they increased in the Northeast and remained steady in the West.

Home sales rose 0.7% compared to the previous year. Inventory of existing homes dropped 1.9% to 1.54 million units, which would require 4.6 months to deplete at the current sales pace. The median home price increased 2.0% from a year ago to $434,100. First-time buyers composed 29% of sales, down from 33% in June and slightly higher than the 28% seen a year ago.

A sustainable housing market typically requires a 40% share of first-time buyers, which is not currently being met.