U.S. sales of existing homes slipped for the fourth consecutive month, declining 0.7 percent in July to the slowest pace in more than two years as the real estate market shows signs of cooling.
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The National Association of Realtors said Wednesday that homes sold last month at a seasonally adjusted annual pace of 5.34 million. Home sales have fallen 1.5 percent during the past 12 months.
The U.S. housing market is hurt by a widening wealth gap, as inventories of lower-priced homes remain tight. Sales of single-family houses worth more than $500,000 have jumped in the past year, led by a 16.2 percent surge in sales of houses valued at more than $1 million.
But homes priced between $100,000 and $250,000 — a level the middle class can afford — have barely budged, while sales of homes for less than $100,000 have plunged 10.6 percent from a year ago. There is a shortage of these more affordable homes on the market because existing owners lack the funding to upgrade to a more expensive property.
"The mismatch between the price of what's available and what home buyers are looking for is holding back sales this year," said Danielle Hale, chief economist for realtor.com.
Existing home sales fell in the Northeast, Midwest and South last month, although they increased in the pricier West market.
Inventories did stabilize in July at 1.92 million existing homes available, which was unchanged from a year ago. Prior to last month, home listings had declined on an annual basis for the past three years. Still, sales listings are relatively low and that stifles the potential for higher home sales despite the possible boost in demand because of the recent strength in the job market.
"Unless and until more existing homes enter the market, it is difficult to see a meaningful rise in sales," said David Berson, chief economist at the insurance firm Nationwide. "We expect existing sales this year to be about flat relative to 2017."
Would-be buyers are coping with higher mortgage rates than a year ago, and home price growth that has consistently outpaced average wage gains.
The median sales price in July increased 4.5 percent from a year ago to $269,600.
The average interest rate charged on a 30-year, fixed-rate mortgage was 4.53 percent last week, up from 3.89 percent a year ago, according to mortgage buyer Freddie Mac.