High prices didn't deter Americans from homebuying in July
House for Sale (AFP)

US homes for sale were in short supply and expensive in July, but Americans continued buying, according to industry data Monday showing sales rose for a second straight month.

Existing home sales climbed two percent last month to an annual rate of 5.99 million, seasonally adjusted, the National Association of Realtors (NAR) said, a pace that was above analysts' expectations.

The US real estate market grew white hot last year as the Covid-19 pandemic disrupted daily life and the Federal Reserve implemented easy money policies to support the economy, which made mortgages cheap and fueled sales.

But that demand drained supplies and record-setting prices are now seen as keeping buyers out of the market, a dynamic that NAR Chief Economist Lawrence Yun pointed to in the July data.

"Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren't seeing as much growth because there are still too few starter homes available," he said in a statement.

However, he noted an increase in supply that was helping to ease the frenzied buying.

Total inventory was 1.32 million units as of the end of last month, up 7.3 percent from June but nonetheless 12 percent lower than the same month last year, the report said.

Unsold inventory sat at a 2.6-month supply, only slightly more than in June and well below the 3.1-month supply seen in July 2020.

The median existing home price declined slightly from June to $359,000, but that was still nearly 18 percent higher than its level last year.

"Going forward, the market for existing homes will be supported by strong demand and mortgage rates that remain relatively low," said Nancy Vanden Houten of Oxford Economics.

However, she warned that the ongoing supply shortage will continue to challenge the market by keeping many buyers away.

"While sales should be up about five percent for the year because they started 2021 with some momentum, we expect they will mostly move sideways over the rest of the year," she said in a note.

Sales growth was widespread in the United States in July, with the Midwest rising 3.8 percent, the South 1.2 percent and the West 3.3 percent. Sales in the Northeast were flat.