US Existing Home Sales Fall for Second Straight Month as Affordability Pressures Persist

11 August 2026

The U.S. housing market remained under pressure in July as sales of previously owned homes declined for a second consecutive month, with rising mortgage rates, elevated prices and limited inventory continuing to keep many prospective buyers on the sidelines.

Existing home sales fell 1.7 percent in July to a seasonally adjusted annual rate of 4.06 million units, according to the National Association of Realtors. Economists surveyed by Reuters had expected a slightly lower pace of 4.05 million units. Compared with July last year, sales were up a modest 0.7 percent.

Mortgage rates remain one of the biggest obstacles facing buyers. The average rate on a 30-year fixed mortgage reached 6.69 percent last week, its highest level since July 2025. Rates have climbed 71 basis points since the Middle East conflict began in February, as higher oil prices added uncertainty to financial markets.

The increase has created difficulties on both sides of the housing market. Buyers face significantly higher monthly payments, while existing homeowners have little incentive to sell properties financed with much cheaper mortgages. Many homeowners continue to hold fixed rates below 5 percent, making a move considerably more expensive. That reluctance to sell is contributing to an already tight supply of homes.

Inventory of previously owned properties fell 1.9 percent in July to 1.54 million units, representing a 0.6 percent decline from the previous year. At the current sales pace, available inventory would last approximately 4.6 months.

Limited supply is also keeping prices elevated. The median existing home price increased 2 percent from a year earlier to $434,100, placing additional pressure on households already dealing with higher borrowing costs. The difficulties are particularly visible at the lower end of the market.

Homes priced at $250,000 or less accounted for much of the weakness in sales, reflecting a severe shortage of affordable starter properties. In contrast, homes priced at $750,000 and above experienced double-digit sales growth.

Economists say the divide illustrates a broader K-shaped economy in which wealthier households are benefiting from rising financial markets while middle and lower income consumers face greater affordability pressures.

First-time buyers are among those feeling the strain. They represented only 29 percent of July home purchases, down from 33 percent in June. Economists generally consider a share closer to 40 percent necessary for a healthy housing market.

Regional results were mixed. Sales declined across the Midwest and South, increased in the Northeast and remained unchanged in the West.

The housing slowdown comes despite residential investment rebounding during the second quarter after five consecutive quarterly declines. Economists remain skeptical that the improvement represents the beginning of a sustained recovery because affordability remains such a significant obstacle.

There was better news elsewhere in the economy. Small business confidence climbed to an 11-month high in July, with the National Federation of Independent Business Optimism Index rising 2.4 points to 99.8.

Hiring intentions also strengthened considerably. Twenty percent of small business owners said they planned to create jobs during the next three months, the highest proportion since October 2022.

For housing, however, the outlook remains difficult. High mortgage rates are discouraging buyers while simultaneously persuading existing homeowners to stay put, restricting inventory and supporting prices.

Until borrowing costs ease or housing supply improves significantly, the American real estate market may remain caught in the same cycle of limited affordability, reluctant sellers and subdued sales.