Report: July home sales surge 7%

Home sales surged in July, but signs of weakening demand and higher mortgage rates could slow the housing market during the second half of the year, according to Zillow's latest market report.

Sales of existing single-family homes increased 7% year-over-year in July, the strongest annual gain so far this year, Zillow said. But newly pending listings -- a measure of homes moving from "for sale" to "pending" and an indicator of future sales -- rose just 0.3% from a year earlier and fell 7.7% from June.

The divergence suggests July's strong sales numbers may not be sustained.

July's 382,898 home sales largely reflected purchase contracts signed weeks earlier, when mortgage rates were near 6.5%, Zillow said. Mortgage rates rose during July following an increase in oil prices, potentially causing some buyers to delay their searches.

"July was a strong month for existing home sales, but unfortunately it may represent the peak of what we can expect for the rest of the year," said Mischa Fisher, chief economist at Zillow, in a statement.

Fisher said strong activity in June was fueled by pent-up demand and an improving interest-rate environment. But weak growth in pending sales and a worsening rate environment could lead to flat or declining transaction volumes in some regions during the rest of the year.

Affordability also could deteriorate, according to Zillow.

The typical U.S. home was valued at $371,757 in July, up 0.4% from June and 1.1% from a year ago. The monthly mortgage payment on a typical home, assuming a 20% down payment and excluding taxes and insurance, was $1,888, down 0.9% from a year earlier.

That affordability advantage could disappear if mortgage rates remain above year-ago levels in August and beyond, Zillow said.

Nationally, the housing inventory continued to grow. About 1.41 million homes were listed for sale in July, up 1.5% from a year earlier and 0.9% from June. New listings totaled 387,203, an increase of 3.1% from a year earlier but a 4.2% decline from June, the report said,

Homes also spent longer on the market. The median home nationwide took 25 days to go pending in July, five days longer than a year earlier and one day longer than in June. About 27.1% of listings had a price cut, compared with 27.4% a year earlier and 25.7% in June.

San Diego's housing market showed some of the same signs of a slower market, although sales growth was stronger than the national average.

The typical San Diego-area home was valued at $936,560 in July, according to Zillow, essentially unchanged from June and up 0.6% from July 2025. The area's inventory declined 7.7% from a year ago, while the sales count showed a 9.6% annual increase, the report said.

The San Diego figures contrast with several other major California markets.

Los Angeles had a typical home value of $966,820, up 0.9% annually, while inventory was down 2.8%. San Francisco's typical home value was $1.14 million, up 2.1% annually, while inventory was down 15.8%. San Jose's typical home value was $1.57 million, down 0.4% from a year earlier.

San Diego rents, meanwhile, continued to rise. The typical rent was $3,008 a month in July, up 0.3% from June and 1.8% from a year earlier.

Across the rental market, the typical U.S. rent reached $1,962 a month in July, up 0.3% from June and 2.3% from a year earlier. Nearly 40% of rental listings on Zillow offered a concession, up from 36% a year earlier, suggesting landlords continue to compete for tenants even as rents rise.