Housing Market Shows Unexpected Resilience as Sales Rise in July

Published in House and Home on Thursday, August 21st 2025 at 14:19 GMT by HousingWire
^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

The U.S. housing market is sending mixed signals, but a recent surge in existing home sales suggests it’s proving more resilient than previously anticipated. After a surprisingly weak June, sales rebounded in July, offering a glimmer of hope for the sector and potentially easing concerns about a looming recession. While affordability remains a significant hurdle, buyers are cautiously returning to the market, driven by a combination of factors including stabilizing mortgage rates and a persistent shortage of inventory.

According to data released by the National Association of Realtors (NAR), existing home sales increased 3.3% in July compared to June, reaching a seasonally adjusted annual rate of 4.07 million. This reverses the 5.1% decline seen in June, which had brought sales to their lowest level in over two decades. While still significantly lower than the 5.27 million homes sold at this time last year – representing a 19.6% decrease – the July figures indicate a potential bottoming out after months of downward pressure.

Inventory Remains Tight, But Shows Signs of Life

One of the key drivers behind the market’s current state is the ongoing inventory shortage. While total housing inventory remains historically low, it did see a modest increase in July, rising to 1.08 million units – up from 1.04 million in June and 1.03 million a year ago. This represents just 2.1 months’ supply at the current sales pace, still well below the six-to-seven month range typically considered balanced. However, the slight increase offers some hope for buyers struggling to find options.

The median existing home price also remains elevated, sitting at $407,600 in July. This is 0.9% higher than a year ago, although it’s down from the record high of $413,500 set in June. The continued price appreciation, despite slowing sales volume, highlights the persistent demand and limited supply that continue to characterize the market.

Mortgage Rates Play a Crucial Role

The fluctuating mortgage rate landscape continues to be a major factor influencing buyer behavior. After reaching levels above 7% earlier this year, rates have shown some signs of moderation in recent weeks. While still elevated compared to historical averages, the slight decrease has provided some breathing room for potential buyers and contributed to the rebound in sales. According to Freddie Mac, the average 30-year fixed mortgage rate currently sits around 6.9%, although this remains a significant hurdle for many aspiring homeowners.

"July’s numbers are encouraging," said Lawrence Yun, NAR's chief economist. "The market is transitioning – it's neither experiencing a crash nor a boom. The rebound in sales suggests buyers are stepping back into the market as mortgage rates stabilize and inventory slowly improves."

Regional Variations Tell a Complex Story

The housing market isn’t uniform across the country, and regional variations paint a more nuanced picture of the current situation. Sales increased in the Northeast and Midwest, while they declined in the South and West. This reflects differing economic conditions and affordability challenges across different regions. For example, the West continues to grapple with some of the highest home prices and mortgage rates in the nation, dampening buyer enthusiasm.

First-Time Buyers Struggle Amidst Affordability Concerns

Despite the recent uptick in sales, first-time homebuyers continue to face significant obstacles. The combination of high home prices, elevated mortgage rates, and limited inventory makes it increasingly difficult for them to enter the market. First-time buyers accounted for 29% of sales in July, down from 31% a year ago, highlighting the ongoing challenges they face.

Looking Ahead: A Path to Stabilization?

The rebound in existing home sales in July offers a tentative sign that the housing market may be stabilizing after a period of significant decline. However, several factors remain crucial to watch in the coming months. Continued moderation in mortgage rates would likely further bolster buyer confidence and support sales activity. An increase in inventory, while already showing signs of improvement, is essential to alleviate affordability pressures and provide more options for buyers.

While a return to the frenzied pace of the pandemic-era market seems unlikely, the recent data suggests that the housing sector may be weathering the storm better than initially feared. The market’s trajectory will depend heavily on how these key factors evolve in the months ahead, but for now, the July numbers offer a much-needed dose of optimism.

N※N

Housing Market Shows Unexpected Resilience as Sales Rise in July