• July existing home sales fell 1.3 percent from June to 5.44 million units (SAAR), the lowest level since August 2016, according to the National Association of Realtors. Sales were up 2.1 percent from a year ago.
• Inventory of existing homes fell 2.2 percent from June and 8.9 percent from a year ago (seasonally adjusted), the 26th straight month of declining inventory.
• The median seasonally adjusted price of existing homes sold in July rose 6.4 percent year-over-year, the 65th consecutive month with an annual increase.

Today’s existing home sales data was disappointing, if unsurprising, and the decline in sales in July was compounded by downward revisions to June sales. The American housing market is stuck in its own kind of stagflation: Existing home sales have been flat since last fall, while home values are up more than 4 percent over the same period. For more than two years now, inventory has been has been contracting, pushing the housing market into an inventory crisis. The boom in renter household formation that we saw two years ago is now spilling over into the purchase market as young adults begin to feel confident enough in the labor market to buy. Mortgage rates increased modestly in July, a small increase that may have complicated purchase plans for some marginal buyers and potentially moderating what would have otherwise been more aggressive price growth last month. But rates overall remain near historic lows, and the small bump was not enough to offset the sometimes intense upward pressure on prices from buyers competing for increasingly scarce homes on the market. It is difficult to imagine these underlying dynamics shifting in the near-term. New construction has been slowly but steadily increasing, but as yesterday’s new home sales data confirmed, single-family home construction remains well below levels needed to meet current demand, particularly at prices entry-level buyers can afford.