Nationwide, sales hit their highest level of the year, rising 4.7% from June but falling 17.6% on a year-over-year basis, RE/MAX said. 

July saw the NAHB/Wells Fargo Housing Market Index post its second-largest monthly drop ever, as worries about housing affordability dampened builder sentiment. 

High mortgage rates and increased prices are keeping homebuyers on the sidelines.

Today buyers are finding more inventory, slowing price growth, competition declines and dropping mortgage rates.

The increase ends a six-month string of monthly declines, the National Association of REALTORS® said.

New-home inventory rose to 444,000 homes in May from 437,000 homes in April, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.  

Meanwhile, existing-home sales slid 3.4% from April to a seasonally adjusted annual rate of 5.41 million, according to the National Association of REALTORS®. 

Realtor.com’s updated 2022 forecast sees housing demand returning to pre-pandemic levels.

Nationwide, sales fell 8.5% annually and rose 5.8% monthly, as rising interest rates and home prices weighed on homebuyers’ purchasing power, RE/MAX said.

New-home completions rose during the month, however, with the increased inventory representing a rare bright spot in an otherwise gloomy government report. 

Mortgage lending took a nose dive across the U.S. in the first quarter of 2022

Redfin economists say they expect the cooldown in budgets to lead to a cooldown in price growth over the next few months. 

Worsening affordability challenges are affecting first-time homebuyers

The shift comes at a great cost as rising mortgage rates continue to keep buyers out of the market.

Nationally, the index posted its highest annual increase ever.

With affordability reduced, some buyers are pulling back from the market forcing sellers to adjust their price expectations.