In July, U.S. home sales for previously owned properties decreased as soaring prices and increasing mortgage rates posed challenges for potential buyers. According to the National Association of Realtors (NAR), sales fell by 1.7% from June to a seasonally adjusted annual rate of 4.06 million units. This figure slightly exceeded economists’ expectations of 4.05 million units, as reported by FactSet.

Although sales improved by 0.7% compared to last year, home prices reached unprecedented levels in July. The U.S. median sales price rose 2% year-over-year to $434,100. June had marked an all-time high with a median price of $442,800, the highest since 1999. Home prices have been increasing annually for 37 consecutive months.

Freddie Mac reported last week that the 30-year fixed-rate mortgage hit 6.69%, the highest in over a year. This was the fifth consecutive week of rate increases, compounding the difficulties for prospective buyers facing steep borrowing costs.

Chief Economist Carl Weinberg of High Frequency Economics noted the lack of positive indicators in the July housing report. Weinberg commented, “No one who has a home already can afford to sell it. People with ultra-low COVID-era mortgages cannot afford to give them up. If no one is selling, no one can be buying, and inventories are low.”

The annual pace of home sales has hovered near 4 million for three years, significantly below the historic norm of around 5.2 million. The housing market has struggled since mortgage rates started rising in 2022, leaving sales nearly flat last year at a 30-year low.

Persistently high mortgage rates, influenced by the U.S.-Iran war and rising oil prices, have led to higher long-term bond yields that guide home loan pricing. Consequently, mortgage rates have climbed, and inventory remains below historical averages.

As of last month, 1.54 million homes were unsold, marking a 1.9% decrease from June and 0.6% fewer than July last year, according to NAR. Prior to the COVID-19 pandemic, a typical inventory level was around 2 million homes. Current inventory equates to a 4.6-month supply at the present sales pace, while a balanced market traditionally involves a 5- to 6-month supply.

Regionally, the Northeast experienced the fastest price growth, with a 5.2% increase year-over-year due to limited inventory. First-time homebuyers accounted for 29% of sales, down from 33% in June, but slightly up from 28% in July 2025. Historically, first-time buyers comprise about 40% of home sales.