Closed existing-home sales declined for a second consecutive month in July as higher mortgage rates tamped down buyer demand, the National Association of Realtors (NAR) said Tuesday.

Meanwhile, the annual pace of existing-home sales remained only 0.7% higher than a year ago on a seasonally adjusted basis. The 4.06 million unit annualized sales pace in July was 1.7% slower than June.

The Northeast was the only U.S. region to post a monthly bump in sales momentum, notching 2% growth. Sales declined by 2% in the Midwest and 3.1% in the South, while the West saw no change over the month.

“Year-to-date sales are up 2.4% and there’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%,” said NAR Chief Economist Lawrence Yun in a press release, evincing optimism.

Average mortgage rates for typical 30-year home loans ended July at 6.81%, a one-year high, according to Mortgage Bankers Association data, after spending most of June around 6.6%.

Existing-home sales reflect closed contract activity, meaning the data reported by NAR on Tuesday largely reflects properties that went under contract in June.

“Today’s drop in existing home sales isn’t overly surprising given where rates sit,” said Sarah Bonnarens, director of economic research at NewHomeSource, the consumer portal for home builder data platform Zonda.

In commentary shared with Scotsman Guide, Bonnarens explained that existing homeowners and prospective first-time buyers are largely waiting for the market fundamentals weakening purchase affordability to give way.

“Unlike the new home market, where builders can use incentives like mortgage rate buydowns to encourage sales, existing homeowners have fewer tools to offset today’s financing costs,” said Bonnarens.

On a year-over-year basis, existing-home sales increased 2.1% in the Midwest and 1.4% in the West, while remaining unchanged in the Northeast and South. Nationwide, median time on market lengthened by just one day to 29.

Sky-high home prices have also contributed to sluggish buyer demand, though regional price performance varies considerably across the U.S., fueled by supply factors.

After hitting an all-time high of $440,600 in June, median existing-home sale prices came in at $434,100 in July, up 2% from a year ago. Total housing inventory, however, was down 0.6% from a year ago and 1.9% from June at around 1.54 million units.

“Weak sales would usually create more downward pressure, especially if homes accumulated on the market,” said Odeta Kushi, deputy chief economist at title insurance giant First American Financial Corp. Limited supply, however, particularly in Northeast and Midwest markets, has “kept competition alive,” she continued.

“Price growth has slowed considerably from the pandemic years,” noted Kushi in commentary shared with Scotsman Guide, “but the market hasn’t experienced the broad buildup in inventory that would produce a faster national price correction.”

Median existing-home sale prices rose annually across all U.S. regions in July, led by 5.2% growth in the Northeast and 2.8% gains in the Midwest. The South posted 0.9% growth while the West stayed in positive territory with a 0.2% rise from a year ago.