The National Association of Realtors Existing Home Sales Report, which measures closings on existing homes, showed that sales were down 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year over year, sales were down 20.2% from July 2021’s 6.03 million.

Also, within the report, we saw that first-time homebuyers made up 29% of transactions in July. While that’s down slightly from the 30% we saw in the previous report, it is right around the same level we were at last year. Considering that the median home price for all housing types in July is up 10.8% year over year to $404,000 and the rise in interest rates, and only losing 1% of the market share, there is some resiliency to be seen.

When we take a look at inventory, housing inventory is up slightly to 1.31 million units from last month’s 1.26 million. This is a seasonal increase in inventory that happens between spring and summer every year. Parents want their kids to start school at the beginning of the school year so they have to get their houses on the market. We are also starting to see the month over month uptick in inventory decrease and perhaps crest which usually happens around August every year. In the previous report, inventory increased 10% month over month, but at the end of July the increase in inventory was 4.8%. Another aspect of inventory that is being overlooked is that even though there are 1.31 million existing homes in inventory, 563,000 are under contract. That’s 43% of inventory already off the market! The actual number of active listings or actual inventory is 747,000 homes! This also speaks to demand. In a normalized market about 25% of the inventory would be under contract!

When we put all of this data together, we can see that it is still a strong housing market that has a lot of opportunity. Even though Existing Home Sales did come in a little soft and we are certainly not in an inventory boom like the media has been reporting. It still speaks to the strength in home pricing and demand for homes. It’s simple economics 101 of supply and demand. With inventory being so low and the demand being so high, that is why home prices continue to point higher.

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A Family

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