In July, sales of existing homes reversed a four-month downward trend, with a 1.3% increase compared to June, reaching a seasonally adjusted annual rate of 3.95

million units, according to the National Association of Realtors (NAR). This marks the first uptick in home sales in five months, though sales remained 2.5% lower than the same period last year.

The Northeast saw the most significant gains in sales, while the Midwest remained flat. Prices also experienced the highest increases in the Northeast.

"Although the gain is modest, home sales continue to be sluggish," said Lawrence Yun, NAR's chief economist. "However, buyers are noticing more options, and affordability is improving thanks to lower interest rates."

These sales reflect contracts likely signed in May and June, when mortgage rates for a popular 30-year fixed loan were above 7%. Rates began to decline in July, currently hovering around 6.5%.

All-cash transactions constituted 27% of July sales, slightly up from 26% the previous year and significantly above the historical average.

The inventory of homes for sale continued to rise in July, with 1.33 million houses on the market by the end of the month—a 0.8% increase from June and a 19.8% jump compared to July 2023. At the current sales pace, this represents a four-month supply, slightly down from June.

Despite the increased supply, home prices remained high. The median price of an existing home sold in July was $442,600, up 4.2% year over year.

First-time buyers accounted for 29% of sales in July, unchanged from June but down from 30% in July 2023. Historically, first-time buyers represent closer to 40% of the market, but affordability has been strained over the past two years due to rapidly rising home prices and higher mortgage rates.

As mortgage rates have slightly decreased, demand is beginning to rebound. A separate report from Redfin, a real estate brokerage, indicated that requests for tours and other buying services from Redfin agents increased by 4% over the last week, reaching their highest level in two months.