US existing home sales gained in July following a decline in the previous month.
The National Association of Realtors says that existing sales rose 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July, 0.6% higher than July 2018.
"Falling mortgage rates are improving housing affordability and nudging buyers into the market," said Lawrence Yun, NAR's chief economist. However, he added that the supply of affordable housing is severely low. "The shortage of lower-priced homes have markedly pushed up home prices."
While sales gained in 3 of the major regions – 8.3% in the West, 1.8% in the South, and 1.6% in the Midwest - they declined in the Northeast by 2.9%.
There were fewer homes available for sale in July with total inventory of 1.89 million, down from 1.92 million in June; that’s 4.2 months of supply.
The median existing-home price for all housing types in July was $280,800, up 4.3% from July 2018 ($269,300). July's price increase marks the 89thstraight month of year-over-year gains.
Homebuyers need confidence
While mortgage interest rates fell in July, Yun adds that there needs to be several elements coming together that will boost home sales.
"Mortgage rates are important to consumers, but so is confidence about the nation's overall economic outlook," Yun continued. "Home buying is a serious long term decision and current low or even lower future mortgage rates may not in themselves meaningfully boost sales unless accompanied by improved consumer confidence."
The share of existing home sales that were to first time buyers slipped to 32% from 35% in June and equal to the rate of July 2018.