U.S. home sales rose 7% year-over-year in July, marking the strongest annual gain in 2026, according to real estate marketplace Zillow. A total of 382,898 homes were sold last month, with the largest annual sales increase in Salt Lake City, Utah (19.9%), followed by Austin, Texas; Columbus, Ohio; Miami, Florida; and Milwaukee, Wisconsin—each recording at least a 15% year-over-year increase.
At the same time, the average weekly rate on a 30-year fixed-rate mortgage has remained above 6.4% every week since mid-May, according to Freddie Mac data. Since early July, mortgage rates have risen weekly, dampening buyer enthusiasm. Zillow warns that unless rates decline, typical mortgage payments could exceed last year’s levels in August, potentially weakening sales growth for the remainder of 2024.
Part 1: Immediate Developments
Home Sales Surge Amid High Rates
The 7% year-over-year increase in U.S. home sales in July reflects pent-up demand and earlier contract signings when mortgage rates were slightly lower. However, the 30-year fixed-rate mortgage has stayed above 6.4% since mid-May, with weekly increases since July 1. Zillow projects that if rates remain elevated, the typical mortgage payment could surpass 2023 levels in August, potentially reducing transaction volumes in late 2024.
Luxury Market Thrives While Starter Homes Struggle
Despite a 5.4% decline in starter-home sales in May compared to 2023, the availability of lower-priced homes has increased by 4.5%. The typical starter-home value reached $202,000 in May, up 2.3% year-over-year. Meanwhile, luxury home sales (top 5% of properties, ~$1.9M nationally) rose 6.2% in May, highlighting a widening gap in housing affordability.
Part 2: Deeper Context & Analysis
Mortgage Rates and Affordability Pressures
The 30-year fixed-rate mortgage has exceeded 6.4% every week since mid-May, with no weekly declines since July 1. Zillow notes that while home prices grew 1.8% year-over-year in June—a slowdown from pandemic-era double-digit increases—the median price of an existing home hit $440,600, 49.2% higher than in June 2020. Higher rates have eroded affordability, particularly for first-time buyers.
The K-Shaped Housing Divide
The housing market reflects a broader K-shaped economy, where higher-income households benefit from stock market gains and lower mortgage rates, while lower-income buyers face financial strain. Starter-home buyers have more options and price cuts but struggle with inflation eroding savings and higher down payment requirements. Conversely, luxury home sales are rising as wealthier buyers capitalize on market conditions.
Regional Variations in Sales Growth
The strongest sales gains in July were concentrated in Salt Lake City (19.9%), followed by Austin (15%), Columbus (15%), Miami (15%), and Milwaukee (15%). Zillow attributes this to earlier contract signings when rates were slightly lower, though the trend may reverse if rates remain elevated.
Policy and Market Outlook
Zillow warns that if mortgage rates do not decline, the remainder of 2024 could see flat or declining transaction volumes in some regions. The report suggests that lower mortgage rates would be the primary catalyst for renewed buyer activity, particularly among first-time purchasers facing affordability barriers.