NEW YORK — U.S. existing home sales fell 1.7 percent in July from the prior month to a seasonally adjusted annual rate of 4.06 million, a three-month low, the National Association of Realtors reported, citing persistent high prices and elevated mortgage rates.
Mortgage rates remained a headwind for prospective buyers. The average 30-year fixed rate started June at 6.6 percent and ended the month at the same level, according to Mortgage News Daily — the highest level in nearly a year, up from 5.99 percent at the end of February.
Demand for mortgages has weakened consistently. Applications for home purchase mortgages were 2 percent lower than the same week a year ago, even though rates were slightly higher during that prior period.
Pending home sales in June, which measure signed contracts on existing homes, fell 5.4 percent from May and were down 0.3 percent from June 2025, missing analyst expectations and signaling continued softness in the pipeline.
"The combination of the highest mortgage rates in almost a year and record-high national median home prices has created a tepid housing market — particularly challenging for first-time homebuyers," NAR Chief Economist Lawrence Yun said.
Builder sentiment also deteriorated. The National Association of Home Builders reported its sentiment index dropped to 34 in July from an upwardly revised 36 in June, the 15th consecutive month below 40 — a stretch of sustained negativity not seen since 2012. A reading below 50 indicates negative sentiment.
NAHB Chief Economist Robert Dietz cited elevated mortgage rates, costly land, rising material prices and skilled labor shortages as the primary pressures on affordability.
Builders have responded by cutting prices and expanding incentives. The share of builders reducing prices reached 37 percent in July, up from 35 percent in June and 32 percent in May. Some 63 percent of builders offered sales incentives in July, up from 62 percent in June, extending a 16-month streak in which that share has held at 60 percent or higher.
Despite declining sales volume, prices continued rising. The national median existing-home price hit a record in June, with low housing supply maintaining upward pressure even as transaction counts fall.
Newly enacted federal housing legislation aims to address supply constraints by reducing permitting red tape and helping localities accelerate housing approvals. Dietz called the legislation a positive step toward expanding supply and lowering costs, but said additional policy action at the state and local levels remains necessary.
