Housing indicators show promise for HVAC demand

A handful of indicators suggest that the U.S. housing market may be improving — a positive signal for future replacement demand. 

What’s happening: U.S. sales of existing homes grew two percent from June to July, according to the latest data from the National Association of Realtors (NAR), reflecting slowing home-price growth and easing mortgage rates. 

Why it matters: Existing home sales serve as a proxy for replacement demand, as home purchases have historically driven increased consumer spending on improvements within the first year of buying. 

Zoom in: While affordability remains an issue, as U.S. home prices have increased roughly 50 percent over the past five years, growth has slowed in recent months, with June seeing the smallest yearly gain since the summer of 2023, according to data released Tuesday. 

• Meanwhile, the average 30-year fixed mortgage rate has fallen slightly from the beginning of this year, hovering around 6.5 percent.
• And the number of homes listed for sale or under contract — an indicator of future sales — in July increased nearly 16 percent from the same month last year, hitting the highest level since May 2020, the NAR noted. 

What they’re saying: “The ever-so-slight improvement in housing affordability is inching up home sales,” said Lawrence Yun, chief economist at the NAR. “Wage growth is now comfortably outpacing home price growth, and buyers have more choices.”

• “Homebuyers are in the best position in more than five years to find the right home and negotiate for a better price,” he added.