July 2025 Real Estate Market Update: Sales Rise, Inventory Increases, and Prices Reach Record Highs
The National Association of Realtors reported a 2% increase in sales of previously owned homes in July, reaching 4.01 million units on a seasonally adjusted, annualized basis. This exceeded analysts' expectations and was 0.8% higher than July 2024. The rise in sales can be attributed to contracts likely signed in May and June when mortgage rates were declining.
Inventory of homes for sale increased by 15.7% from the previous year, with 1.55 million homes available at the end of July. This represents a 4.6-month supply at the current sales pace, indicating a balanced market between buyers and sellers. While inventory levels are the highest since May 2020, they remain below pre-Covid levels.
The increase in inventory has alleviated some pressure on prices, with the median price of an existing home sold in July reaching a record high of $422,400. This marks a 0.2% increase from the previous year. The market may be reaching an inflection point as prices have been rising annually for the past 25 months.
Lawrence Yun, NAR's chief economist, noted that the slight improvement in housing affordability is driving up home sales. Wage growth outpacing home price growth and increased choices for buyers are contributing to this trend. Condominium sales in the South have been increasing, particularly as prices in the region have been declining.
Sales activity remains strongest in the higher end of the market, with sales of homes priced over $1 million rising by 7.1% year over year. However, sales of homes priced below $250,000 have seen a decline. The average time for homes to sell has increased to 28 days in July, up from 24 days the previous year.
First-time buyers accounted for 28% of sales in July, down from 30% in June and 29% in July 2024. Investors made up 20% of all transactions, up from 13% in July 2024, potentially due to the increase in supply. The housing market continues to show signs of stability and adaptation to changing conditions.