US existing home sales drop in July as mortgage rates weigh on buying

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Sales of previously owned homes in the United States dropped in July, industry data released on Tuesday showed, as high mortgage rates -- and fears of further rate hikes -- weighed on activity.

Existing home sales dropped 1.7 percent on a month-on-month basis to a seasonally adjusted annual rate of 4.06 million in July, the National Association of Realtors (NAR) data showed.

The average rates of 30-year mortgages ticked up steadily in July, coming in at 6.66 percent by the end of the month -- their highest level since a year ago.

"Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months," said NAR Chief Economist Lawrence Yun.

"Year-to-date sales are up 2.4 percent and there's no doubt that the housing market would be thriving if average mortgage rates were to return near six percent," Yun said.

Heather Long, chief economist at Navy Federal Credit Union, agreed that sales were "stalling" due to the level of mortgage rates.

"The 30-year mortgage is back at 6.7 percent and buyers just aren't interested in locking in such a high rate," she said.

"Sellers are having to slash prices and offer incentives. The falloff is especially noticeable for single-family homes where the median price is now $440,300 and inventory is at the highest level in over a year," Long said.

The data was in line with market expectations, with economists polled by Dow Jones Newswires and the Wall Street Journal expecting the annualized rate to come in at 4.0 million in July.

The median sales price across all housing types was $434,100 in July, the NAR data showed.

That was a two-percent increase from a year ago, marking more than three years of continuous year-on-year price increases.

NAR's Yun said there was "notable" variation across US regions in July's data.

Month-on-month sales rose in the Northeast, were steady in the West and declined in the Midwest and South.