U.S. Existing-Home Sales Reach Prerecession Pace

WASHINGTON—Sales of existing homes climbed in July to their prerecession pace, but low inventory and higher prices threaten to curtail those gains heading into the fall. 

Existing-home sales rose 2% last month from June to a seasonally adjusted rate of 5.59 million, the National Association of Realtors said Thursday. Last month’s sales pace was the highest since February 2007 and 10.3% higher than a year earlier. ...

Total housing inventory fell 0.4% at the end of July to 2.24 million existing homes available for sale, 4.7% lower than a year ago. At the current pace of sales it would take 4.8 months to exhaust the supply of homes on the market, down from 5.6 months a year ago, the NAR said Thursday. ...

Mr. Yun noted that first-time buyers declined to 28% of all buyers, the lowest share since January. Sales are being driven largely by buyers who already own homes, he said.

According to mortgage company Freddie Mac, the average rate for a 30-year fixed-rate mortgage rose in July to 4.05% from 3.98% in June. Mortgage rates are still low by historical standards, but could rise in the fall if the central bank raises interest rates. 

The market dynamics have also given an edge to existing homeowners, who can tap into rising home equity as their own properties appreciate.

U.S. housing starts rose 0.2% in July to a seasonally adjusted annual rate of 1.21 million, the highest since October 2007, the Commerce Department said Tuesday. That is the third time in four months the figures reached a new high since the recession began.

Thursday’s existing-home report showed that July’s gains were driven by sales in the single-family segment, which rose by 2.7%. Condo and co-op sales fell by 3.1%, the NAR said. Prices in both categories rose, with single-family home prices jumping 5.8% and condo prices rising 3.2%. These prices are not seasonally adjusted.

Sales performance also differed by region. Home sales rose in the South and West, but fell in the Northeast and stayed flat in the Midwest. 

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Write to Anna Louie Sussman at anna.sussman@wsj.com