Sales of previously occupied U.S. homes fell in July as record prices and elevated mortgage rates continued to sideline prospective buyers. Existing home sales decreased by 1.7% from June to a seasonally adjusted annual rate of 4.06 million units, according to data from the National Association of Realtors (NAR).

Despite the monthly dip, July sales were up 0.7% compared to the same period last year. However, the median sales price reached $434,100, a 2% increase from July 2025 and a new record for the month. This price increase comes as the benchmark 30-year fixed mortgage rate climbed to 6.69% last week, its highest level in over a year, according to mortgage buyer Freddie Mac. This marks the fifth consecutive week of rising average mortgage rates, adding to the financial strain for potential homeowners.

Lawrence Yun, NAR's chief economist, noted the market's stability despite rising rates, stating that sales would likely be thriving if rates were closer to 6%. Home sales have largely remained near a 4-million annual pace for approximately three years, falling short of the historical norm closer to 5.2 million.

The U.S. housing market has experienced sluggishness since 2022, when mortgage rates began their ascent from pandemic-era lows. Last year, sales of previously occupied homes were nearly flat, reaching a 30-year low. This slowdown is partly attributed to rising inflation expectations, influenced by global events, which have pushed up long-term bond yields and subsequently mortgage rates.

Inventory levels also remain below historical averages. At the end of July, there were 1.54 million unsold homes, a 1.9% decrease from June and a 0.6% drop from the previous year. This figure is significantly lower than the roughly 2 million homes typically available before the COVID-19 pandemic. The current inventory provides a 4.6-month supply at the prevailing sales pace, falling short of the 5- to 6-month supply considered balanced for the market.

Regionally, the Northeast saw the fastest price growth, with a year-over-year increase of 5.2%, driven by limited inventory. First-time homebuyers accounted for 29% of sales in July, a decrease from 33% in June but a slight increase from 28% in July 2025. This percentage remains below the historical average of approximately 40%.