U.S. Existing Home Sales Edge Higher in July, But Remain Stuck at Historic Lows — Evening Brief – 08.21.25  

U.S. existing home sales climbed 2.0% month-over-month in July to a seasonally adjusted annual rate of 4.01 million, according to the National Association of Realtors (NAR). On a year-over-year basis, sales were up just 0.8%, highlighting how the market remains sluggish despite incremental improvements. While the July uptick is welcome, the overall sales pace is still hovering near 15-year lows, reflecting the ongoing strain from mortgage rates above 6%. 

Regional dynamics were mixed: sales rose in the Northeast, South, and West, but slipped in the Midwest. Year-over-year, the South and Northeast posted gains, while the West continued to lag. NAR Chief Economist Lawrence Yun noted that “an ever-so-slight improvement in housing affordability is inching up home sales,” as wage growth now outpaces home price growth, giving buyers modestly more leverage. Condominium sales in the South also saw a boost, with price declines over the past year helping to unlock demand. 

Inventory levels ticked higher, with 1.55 million units available in July, up 0.6% from June and a sharp 15.7% increase from a year ago. The median sales price rose marginally by 0.2% year-over-year to $422,400, extending a streak of 25 consecutive months of price gains, though price growth has cooled significantly. Mortgage rates also offered a touch of relief, averaging 6.72% in July, down slightly from 6.82% in June, per Freddie Mac. 

Still, affordability remains a major hurdle. Only 21% of homes sold above list price in July, compared with 28% in May, suggesting buyers are pushing back against elevated asking prices. Meanwhile, foreclosure and short sales accounted for just 2% of transactions, underscoring broad homeowner financial stability amid cumulative 49% home price appreciation since pre-COVID July 2019. 

Market liquidity, however, remains constrained by the so-called “mortgage lock-in effect.” According to Goldman Sachs, 87% of mortgage holders carry rates below current market levels, with two-thirds enjoying borrowing costs at least two percentage points lower—discouraging them from selling or trading up. Yun estimates that a 6% mortgage rate could add about 500,000 additional sales annually, but with the effective outstanding mortgage rate closer to 4%, turnover will remain depressed until rates fall more meaningfully. 

While the housing market shows glimmers of progress—rising inventory, slight affordability gains, and wage growth outpacing home prices—the structural drag from entrenched low-rate mortgages continues to weigh heavily, keeping existing home sales near historic lows.