Existing Home Sales fell 2.2% from June to July to a 4.07-million-unit annualized pace, per the National Association of REALTORS® (NAR). Sales were also 16.6% lower than they were in July of last year. This report measures closings on existing homes, which represent a large portion of the market, making it a critical gauge for taking the pulse of the housing sector.         

What’s the bottom line? While inventory levels increased 3.7% last month, from 1.07 million units in June to 1.11 million units available at the end of July, housing supply was still well below normal levels with just 3.3 months’ worth of inventory available at the current sales pace. Plus, inventory is even tighter than that figure implies, as many homes counted in existing inventory are under contract and not truly available for purchase. In fact, there were only 647,000 “active listings” last month.

NAR’s Chief Economist Lawrence Yun confirmed that the lack of inventory is a key factor constraining sales activity this summer. Yet demand remains for homes, as evidenced by how quickly correctly priced homes have been selling. Homes stayed on the market on average for 20 days last month, while 74% of homes sold in July were on the market for less than a month.