Existing home sales climb in July

Summary

Sales still mired down by affordability challenges

The housing market is stuck in stasis. Total existing home sales rebounded 2.0% to a 4.0 million-unit pace in July. Although the bounce-back from June's decline was an encouraging sign that activity is not declining sharply, the trend in sales has essentially moved sideways this year as affordability conditions remain challenging and the macroeconomic backdrop weakens.

According to the minutes from the July FOMC meeting, growing downside risks to the economy from the housing sector were discussed at length at the most recent policy meeting. Several officials pointed to sluggish demand and slowing home price appreciation, with the potential for a more substantial deterioration should the stance of monetary policy remain unchanged. While reductions to the federal funds rate may not significantly move the needle for buyer financing rates, lower short-term rates should help bolster the labor market, boost economic growth and give buyers more confidence to move forward with the purchase of a home.

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