U.S. Home Sales Decline Amid High Prices and Mortgage Rates

Recent data reveals a slowdown in the sales of previously owned homes in the United States for July, attributed largely to record home prices and the highest mortgage rates seen this year. The National Association of Realtors (NAR) reported a 1.7% decline in existing home sales from June, adjusting to an annual rate of 4.06 million units. This rate slightly exceeded economists’ expectations of 4.05 million units, according to FactSet insights.

Despite this monthly dip, sales showed a modest 0.7% increase compared to last July. Home prices continued their upward trend, reaching new highs for July. The U.S. median sales price rose by 2%, reaching $434,100. June’s median sales price had peaked at $442,800, marking an all-time high on records dating back to 1999. NAR reported a consecutive annual increase in home prices for the 37th month.

Freddie Mac, a significant mortgage buyer, noted the 30-year fixed mortgage rate climbed to 6.69% last week, representing the highest rate in over a year. This marks the fifth straight week of rate hikes, increasing financial pressure on potential homebuyers due to elevated borrowing costs.

“No one who has a home already can afford to sell it,” commented Carl Weinberg, chief economist at High Frequency Economics. He highlighted the challenge owners face with ultra-low COVID-era mortgages, stating, “If no one is selling, then no one can be buying,” thus contributing to low inventories.

The housing market has hovered around a 4-million-unit annual sales pace for about three years, significantly below the historical norm of about 5.2 million. A slump in the housing market since 2022, when mortgage rates began climbing from pandemic-induced lows, resulted in a flatter rate of home sales last year, matching a 30-year low.

With mortgage rates generally trending higher post the onset of the U.S.-Iran war, expectations of rising inflation fueled by escalating oil prices have pushed long-term bond yields up. These yields are pivotal in setting home loan pricing, nudging mortgage rates upward. Additionally, home inventory remains well below historical averages.

The NAR reported 1.54 million unsold homes at the close of last month, down by 1.9% from June and 0.6% less than July last year. This inventory level is quite below the approximate 2 million homes for sale, typical before the COVID-19 pandemic. The month’s inventory suggests a 4.6-month supply at the current sales pace. A balanced market between buyers and sellers traditionally sees a supply of 5 to 6 months.

Region-specific data shows the Northeast continues to experience price increases faster than other areas, with a 5.2% year-over-year rise, largely driven by inventory shortages. NAR noted first-time buyers accounted for 29% of sales, a dip from 33% in June but slightly up from 28% in July 2025. Historically, first-time buyers constitute closer to 40% of sales.