U.S. Existing Home Sales (July 2024)

U.S. existing home sales improve in July, breaking four-month losing streak

• Existing home sales rose 1.3% month-on-month (m/m) to 3.94 million units (annualized) in July, which was in line with market expectations. Sales were down 2.5% from year-ago levels (an improvement from -5.1% year-on-year in the month prior). 
• Single-family home sales rose 1.4% to 3.57 million units, while sales in the smaller condo/co-op segment held steady at 380k units.
• Activity improved across three Census regions, with sales rising 4.3% (m/m) in the Northeast, 1.4% in the West and 1.1% in the South. Sales in the Midwest were unchanged from the month prior. 
• Total housing inventory in July was 1.33 million units, up 0.8% from June and 19.8% from one year ago (1.11 million). Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.6 months' supply – down from 3.8 months in June but up from 3.0 months in July 2023.
• House prices were up 4.2% from a year ago, a pace similar to that of the month prior, but a deceleration from the 5.3% pace (y/y) in the April-May period. On a seasonally adjusted basis, median home prices improved at a robust clip of roughly 1% m/m after falling by 0.2% in the month prior (seasonal adjustment performed by TD Economics).  

Key Implications

• The improvement in existing homes sales in July is a welcome development, but with sales levels still well below historical norms, it does little to change the narrative of a still sluggish housing market. Reinforcing this point, today's report showed a continued buildup in inventories (up nearly 20% y/y, albeit from very low levels). However, at 3.6 months' supply, inventories show the market is still in seller's territory.
• A notable improvement in pending home sales (which leads actual sales by 1-2 months) in June, coupled with some recent easing in mortgage rates suggests that there may be more room for improvement for sales over the near-term. However, recent changes to real estate commissions, which took effect this past weekend and will take some time for market participants to get used to, may have the potential to muddy the waters and will bear some watching over the near-term. 

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