Affordability and inventory is bleak, but rising interest rates and home prices signal a strong economy.
Courtesy Adobe Stock/Andy Dean Photography

The ongoing impact of the lock-in effect continues to hinder the existing housing market, according to July data from The lack of newly listed homes in the resale market is contributing to an inventory crunch, as says July saw fewer homes on the market compared with last year for the first time in several months.

As 90% of existing homeowners have rates under 5% and mortgage rates hover near 7%, owners remain reluctant to sell and give up their low rates.

Home builders have benefited from the lock-in effect, with the majority of public builders stating the lack of existing-home supply resulted in positive demand trends in the new-home market during recent second quarter earnings calls. Housing economists, including Zonda chief economist Ali Wolf, have cited resale inventory as the most important indicator to gauge the health of the housing market.

According to, there were 6.4% fewer homes actively for sale in July compared with 12 months ago. While active inventory increased 5.4% on a month-over-month basis, 45,000 fewer homes were available to buy on a typical day in July than in 2022. The total number of homes for sale, including homes that were under contract but not yet sold, decreased 9.1% compared with last year.

Within the 50 largest U.S. metros, the number of homes for sale decreased 12% compared with July 2022, and inventory as a whole is 46.4% below pre-pandemic levels. The South is the only region with growing inventory, up 2.8% year over year. Large metro inventory experienced the largest year-over-year declines in the West, where 33.4% fewer homes were available than in July 2022.

In the existing-home market, the typical home spent 45 days on the market in July—11 days longer than July 2022 but 12 fewer days than the July average from 2017 to 2019. The median list price fell 0.9% year over year to $440,000; however, higher mortgage rates compared with July 2022 contributed to the monthly cost of financing 80% of the typical home increasing by $346, or 17.5%, year over year. The increase in the cost of financing far outpaces wage growth (4.7%) and inflation (3%), contributing to greater affordability concerns among would-be buyers.