GEOFF BENNETT: The housing market showed signs# of life in July with existing home sales up## 2 percent from the month before, offering a bit# of momentum to a market that's been struggling.## The national median sales price inched up just 0.2# percent in July from a year earlier to $422,400,## marking the 25th consecutive month# of year-over-year price increases,## and sales edged up 0.8 percent# compared with July of last year.

That's all according to a new report out# today by the National Association of Realtors.

Joining us now to break down the# numbers is Daryl Fairweather,## chief economist for the# real estate company Redfin.

Daryl, thanks for being with us.

DARYL FAIRWEATHER, Chief Economist,# Redfin: Thank you for having me.

GEOFF BENNETT: So what's your read on# today's report?

Do.. suggest the market is turning a corner# or is this just a temporary rebound?

DARYL FAIRWEATHER: It's nice to see# that there's been some improvement in## home sales.

I think that's reflective of# there being more inventory on the market.## Buyers have more to choose from,# which allows for more sales to happen.

But this improvement is coming from a# near record low.

We are still deep in## the hole when it comes to home# sales, and we're going to need## to see a lot more home sales in order# for this to feel like a healthy market.

GEOFF BENNETT: And we're also seeing# some big regional differences,## prices falling sharply in the West and# parts of the South.

They are rising in## the Midwest and Northeast.# What explains that divide?

DARYL FAIRWEATHER: It has to do# with the amount of homes for sale.

There are many more sellers than there are# buyers in the South and in parts of the West,## which is allowing buyers to have more# negotiating power and they're getting## better deals on prices.

In the Midwest and the# Northeast, however, there has -- there was not## a construction boom during the pandemic.# There's much more limited inventory there.

So, buyers have to play on sellers' terms, and# they have to accept these higher valuations.

GEOFF BENNETT: And let's talk about mortgage# rates, because mortgage rates dipped slightly## in July, but they remain far above the# historic lows we saw during the pandemic.

To what extent is the lock-in effect still shaping# the market, people really refusing to put their## homes in the market and move because they have# benefited from historically low mortgage rates?

DARYL FAIRWEATHER: One reason we're not seeing# price cuts happening more often is because home## sellers feel like it's not worth it for them# to sell if they can't get a high enough price.

They have these record low mortgage rates,# which means they're not paying very much in## their monthly mortgage payment.

And# if they were to sell and buy again,## they would have to buy at these higher rates# and pay a lot more money, which means that## they are looking for a lot more money when# it comes to the offers that they're getting.

And if they don't get enough in terms of the# offer, they will just take their home off the## market and not sell.

So that's putting a floor# on how low prices can drop.

Mortgage rates are## so much higher now.

Normally, we would expect# prices to fall by more to compensate that,## but sellers are being stubborn# when it comes to their prices.

GEOFF BENNETT: And what's your# outlook for mortgage rates?

Is## there room for a more substantial decline?

DARYL FAIRWEATHER: It really depends on# what we see happen in the economy.

If we## see more inflation -- we saw a bit hotter# inflation in producer prices this last## week.

So that's one reason that rates might# stay high, but also we're seeing a weakening## job market with fewer jobs created.

And that# might be one reason to expect rates to fall.

It has a lot to do with how tariffs end# up impacting the overall economy.

If the## tariffs result in higher inflation,# then the Federal Reserve will have## to keep interest rates high.

But if# it results in fewer jobs created,## then the Fed would have to step in and cut# rates in order to simulate the economy.

But we don't really know what's going to happen.## It's still early days in terms of# seeing the effects of the tariffs.## Maybe the effects won't really be that# large at all.

We just don't know yet.

GEOFF BENNETT: Yes, good point.

Yes, the data about first-time buyers r.. just 28 percent of sales in July, down# from 30 percent in June.

A decade ago,## the average first-time buyer was# 31 years old.

Now it's closer to 38## years old.

What does that say about the# barriers that young buyers are facing?

DARYL FAIRWEATHER: Young buyers are often# borrowing a substantial amount in order## to afford their home, whereas existing# homeowners, they are usually selling their## homes.

They get some proceeds from that# they can put towards their next home.

So## they aren't taking on as big of mortgages# as potentially first-time homebuyers are.

So that mortgage rate increase is hitting# first-time homebuyers a lot harder than## it is existing homebuyers.

And that's why we're# seeing a lot of first-time homebuyers just decide## to keep renting.

The rental market has been# pretty stable over the last couple of months.## It's starting to heat up a little bit, which# may be a sign of more rent increases to come.

But for the time being, if you're comparing, say,# a one-bedroom apartment to a one -bedroom condo,## it's going to be more affordable in the short run# to rent that apartment than it will be to buy it.

GEOFF BENNETT: Is there any realistic# path for this generation to enter the## housing market in significant numbers?

DARYL FAIRWEATHER: Yes, I think that# there are some reasons to be optimistic.

The Gen Z is a smaller generation than# millennials were.

Millennials are a bit## past peak homebuying age.

They're in their# late 30s, not their early 30s anymore.

So I## think there will be less competition from the# buy side in terms of buying homes.

And then,## on the sell side, Baby Boomers are getting# older.

They should be downsizing soon.

So that could create more inventory.

And# then another reason to be optimistic is## that many states have made it easier# to build more housing.

So the next## time we do see an increase in demand for# housing, hopefully, it will also come with## an increase in supply as builders jump in to# take advantage of increasing demand for homes.

GEOFF BENNETT: Daryl Fairweather, chief economist# at Redfin, great to speak with you.

Thank you.

DARYL FAIRWEATHER: Thank you.