The existing-home sales report for July from the National Association of Realtors (NAR) has good news and bad news.
The good news is that existing-home sales grew 1.3% month over month to a seasonally adjusted annual rate of 3.95 million, breaking a four-month streak of declines. The bad news is they’re still down 2.5% compared to July 2023.
High mortgage rates and historically low inventory continue to push home prices higher, with the median price rising 4.2% year over year to $422,600. It’s the 13th consecutive month of annualized gains.
But with mortgage rates dropping recently and homebuyers expecting the Federal Reserve to cut interest rates next month, downward pressure on prices could goose the market this fall. Buyers already have more choices if and when they do reenter the market, as inventory is up 19.8% year over year.
“Despite the modest gain, home sales are still sluggish,” NAR chief economist Lawrence Yun said in a statement. “But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.”
With home prices still rising, shelter costs now account for the vast majority of inflation. According to the Consumer Price Index (CPI) for July, yearly inflation sank to 2.9%, and the flattening price increases in other categories resulted in home prices accounting for 90% of the monthly gain for the CPI.
Americans consistently say that inflation is an important issue in the 2024 election, so the two candidates for president are feeling pressure to have a plan for bringing down housing costs.
Vice President Kamala Harris, the Democratic nominee, has released a detailed policy proposal. Her plan calls for the construction of 3 million housing units by offering tax incentives for homebuilders, in addition to down payment support for first-time buyers to the tune of $25,000.
The Republican platform also calls for promoting homeownership for first-time buyers through tax incentives, but GOP nominee Donald Trump’s rhetoric on the campaign trail dovetails with an issue he’s made central to his political career — illegal immigration. His campaign says that the presence of undocumented immigrants puts upward pressure on housing demand.
Trump’s vice presidential running mate, JD Vance, has gone on the record about housing more than Trump has thus far, although Vance’s comments predate his nomination. He has echoed the GOP platform on the impacts of immigration in addition to criticizing institutional investors.
While housing costs are almost certain to play a large role in the election, signals about mortgage rates offer a glimmer of optimism.
“Easing inflation helped accelerate the decline in mortgage rates in mid-July and rates currently hover near 15-month lows,” Realtor.com chief economist Daniele Hale said in a statement. “This is likely to bode well for buyers in the fall — a typically advantageous season for home shoppers.”