US Housing Market: A Glimmer of Improvement Amid Challenges

Sales of previously occupied US homes increased in July, helped by lower mortgage rates, slower home price growth, and high inventory levels. Despite challenges like high mortgage rates, affordability issues, and a notable decline in first-time buyers, experts see slight improvements in housing affordability.

In July, US homebuyers saw a flicker of hope as sales of previously occupied homes increased by 2 percent from June, reaching a seasonally adjusted annual rate of 4.01 million units. According to the National Association of Realtors (NAR), this uptick defied economists' expectations, encouraged by modestly lower mortgage rates and a deceleration in home price growth.

Despite these improvements, the housing market continues to face affordability challenges. As mortgage rates linger at high levels, and the pace of home price growth slows, first-time buyers remain disadvantaged, comprising only 28 percent of home sales last month, down from historical norms. Meanwhile, the inventory of unsold homes swelled to 1.55 million, marking the highest since May 2020.

Industry experts, like NAR's chief economist Lawrence Yun, highlight that, while affordability is still daunting, wage growth surpassing home price growth provides buyers with more choices. Though sellers in certain markets are reducing prices and offering incentives, real estate agents note a shift in power dynamics favoring buyers.

(With inputs from agencies.)