Sales of previously owned U.S. homes fell in July to the lowest level since the start of the year, constrained by a lack of inventory and higher borrowing costs.
Contract closings decreased 2.2% from a month earlier to a 4.07 million annualized pace, National Association of Realtors data showed Tuesday. The rate, which is close to the slowest since 2010, was weaker than nearly all estimates in a Bloomberg survey of economists.
Sales were down more than 18% from a year earlier on an unadjusted basis.
Homeowners have been discouraged from listing their properties as mortgage rates have more than doubled over the past few years, keeping asking prices elevated. More recently, the average 30-year fixed rate has pushed well above 7% to the highest level in more than two decades, suggesting demand will continue to struggle.
The combination of inventory constraints in the resale market and higher borrowing costs is steering some prospective buyers toward new construction, while others have pulled out altogether.
"Two factors are driving current sales activity – inventory availability and mortgage rates. Unfortunately, both have been unfavorable to buyers," Lawrence Yun, NAR's chief economist, said in a statement.
While the number of homes for sale rose from a month earlier to 1.11 million, it marked the smallest total inventory for any July in data back to 1999. At the current sales pace, it would take 3.3 months to sell all the properties on the market. Realtors see anything below five months of supply as indicative of a tight market.
The median selling price rose 1.9% from a year earlier to $406,700.
The NAR's report showed 74% of homes sold were on the market for less than a month. Properties remained on the market for 20 days on average in July, up from 18 days a month earlier.
Existing-home sales account for the majority of US housing and are calculated when a contract closes. Data on new-home sales, which make up the remainder and based on contract signings, are due Wednesday.
