Home sales in July rebound from a four-month slump as the supply increases by almost 20% compared to the previous year.

• In July 2023, there were 1.33 million homes on the market, which was an increase of 19.8% from the same month the previous year and a 0.8% increase from June.

In July, the National Association of Realtors reported a 1.3% increase in closed sales of previously owned homes compared to June, reaching a seasonally adjusted, annualized rate of 3.95 million units. This marked the first gain in four months.

Sales were 2.5% lower compared with the same time last year.

In the Northeast, both sales and prices experienced the most growth, while sales remained stagnant in the Midwest.

"Although there has been a slight increase, home sales remain slow, according to Lawrence Yun, NAR's chief economist, in a statement. However, consumers are experiencing greater options and improved affordability due to decreasing interest rates."

The sales are based on contracts signed in May and June, when mortgage rates were above 7% on the 30-year fixed loan. Rates have since decreased to around 6.5% in July.

In July, all-cash offers accounted for 27% of sales, which is a significant increase from the previous year's 26% and far exceeds the typical average.

The number of homes for sale increased in July, with 1.33 million homes on the market at the end of the month, representing a four-month supply. This was an increase of 0.8% from June and 19.8% higher than in July 2023.

Despite the increase in supply, home prices did not cool down.

In July 2023, first-time buyers accounted for 29% of sales, the same as in June but lower than the 30% recorded in July 2023. Historically, these buyers make up around 40% of home sales, but affordability has been negatively impacted by rising home prices and higher mortgage rates in the past two years.

The demand for real estate services is gradually increasing as rates decrease, according to a report by Redfin, a real estate brokerage.