US Housing Market Warms Up: July Sales Rise, Inventory Jumps Amid Easing ‘Lock-In’ Effect

The U.S. housing market is showing encouraging signs of a thaw, with new figures from the National Association of Realtors (NAR) revealing a 2% rise in existing home sales for July. This modest increase, though still below pre-pandemic levels, is coupled with a significant boost in available homes, marking the highest inventory since the 2020 lockdown period.

In July, 1.55 million units were for sale nationwide, a nearly 16% jump from a year prior. This increase offers much-needed relief for buyers, providing more options and greater negotiation leverage. While homes are taking slightly longer to sell—an average of 28 days compared to 24 days last July—the expanded inventory is a positive shift.

Price trends also indicate a softening in many areas. Reports suggest July saw price declines in 33 of the 50 largest metro areas, with the South and West experiencing notable drops. Nationally, home prices are increasing at their slowest pace in two years, though the median price still nudged up to $422,400.

Mortgage rates, currently averaging around 6.6% for a 30-year fixed loan, have inched down recently to their lowest since October 2024. This slight dip has spurred refinance activity and offers a glimmer of hope for prospective buyers. Experts anticipate rates will hover near this level through the end of the year, with a potential for further declines in 2026, especially if the Federal Reserve opts to cut interest rates.

The long-standing ‘lock-in effect,’ which saw homeowners reluctant to move due to ultra-low pandemic-era mortgage rates, appears to be easing. The rising inventory suggests more homeowners are now willing to put their properties on the market, despite giving up lower rates. This increased fluidity is crucial for a healthier market.

Meanwhile, new construction shows mixed signals, with July housing starts up 5% but building permits down nearly 3% compared to June, signaling ongoing challenges in affordability and labor.

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