The housing market may be starting to favor homebuyers, according to the National Association of Realtors (NAR). Existing-home sales increased in July, bringing about an end to a four-month decline. With inventory levels on the rise and mortgage rates dropping, homebuyers will not only have more options to choose from in the current market, but they’ll see an improvement in affordability as well.

Improving Home Sales

Existing-home sales climbed in July in three of the four major U.S. regions, with only the Midwest remaining steady. Year over year, sales increased in the Northeast and West but declined in the Midwest and South. Despite these gains, home sales remain sluggish. However, Lawrence Yun, chief economist for the NAR, noted, “Consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.” Currently, the 30-year fixed-rate mortgage is averaging 6.09%, according to Freddie Mac. In comparison, a year ago it averaged over 7%.

More Options for Homebuyers

Home inventory also improved in July, with 1.33 million units available for sale. This was up 0.8% month over month and an impressive 19.8% year over year. At the current sales pace, this level of inventory would supply the market for 4.0 months, down from a 4.1-month supply in June but up from a 3.3-month supply recorded in July 2023. Improving inventory levels translates into more choices for homebuyers; after years of record-low inventory levels, this might mean a shift toward a more balanced market.

Home Price Gains

In July, the median price of existing single-family homes rose by 4.2% compared to July 2023. Although prices increased, the rate of growth has slowed compared to previous years. Stabilizing prices, combined with improving mortgage rates, have a direct impact on housing affordability, allowing more homebuyers to enter the market. According to the monthly REALTORS® Confidence Index, the average property remained on the market for 24 days in July, up from 20 days during the same time last year.

Who’s Buying?

First-time buyers remained active in the housing market; this group accounted for 29% of all transactions in July, unchanged from a month ago but down from 30% a year ago. All-cash sales, meanwhile, accounted for 27% of all sales, compared to 26% in July 2023. Individual investors or second-home buyers, who account for many all-cash sales, represented 13% of the market in July, down from 16% both a month ago and a year ago. This suggests that the market may be shifting to more owner-occupied housing.

Regional Sales Breakdown

• Northeast: Existing-home sales annual rate of 490,000; an increase of 4.3% from June 2024 and 2.1% from July 2023. The median sales price of $505,100 represented an 8.3% increase from July 2023.

• Midwest: Existing-home sales annual rate of 920,000; unchanged from June 2024 but a decrease of 5.2% from July 2023. The median sales price of $321,300 represented a 4.5% increase from July 2023.

• South: Existing-home sales annual rate of 1.79 million; an increase of 1.1% from June 2024 but a decrease of 3.8% from July 2023. The median sales price of $372,500 increased 2.3% from July 2023.

• West: Existing-home sales annual rate of 750,000; an increase of 1.4% from both June 2024 and July 2023. The median sales price of $629,500 represented a 3.4% increase from July 2023.