After five straight months of gains carried the median sale price to $442,800 in June, July brought the first pullback of the year. The median home sold for $434,100, a 1.96% decline from June, though still 1.97% higher than the $425,700 we saw in July of last year. A modest summer dip is not unusual, and the bigger picture is that prices have climbed roughly 9.9% since January's $395,000 trough. On the financing side, the 30-year mortgage rate eased slightly to 6.43% in July before jumping to 6.69% in August, its highest level since last summer and a meaningful move away from the 6% low we saw back in March. That combination of a slightly lower price and a slightly lower rate trimmed the median monthly P&I payment to $2,254 in July, down from $2,286 in June. The catch is that this figure is now essentially identical to the $2,253 buyers were paying a year ago, meaning the affordability advantage that lower rates delivered earlier in the year has been completely erased. With August rates moving higher, payments look likely to head back up.

Existing home sales registered 4,060,000 in July, down 1.69% from June's 4,130,000 and roughly 3% below May's 4,190,000 high for the year. On a year-over-year basis, however, sales are up 0.74% from last July's 4,030,000, which means demand is essentially holding steady rather than deteriorating. That is a reasonable outcome given what buyers are facing. Monthly payments are back to where they were a year ago, and the run of price appreciation from January through June asked buyers to stretch further with every passing month. What is encouraging is that sales have stayed in a fairly narrow band between 4,010,000 and 4,190,000 all year, showing a market that has found a floor even as financing costs have moved around. Also worth watching in the background: the Federal Reserve's mortgage-backed securities holdings continue to shrink, falling to $1.93 trillion in August from nearly $2.07 trillion last November, which removes a source of support for mortgage rates over time.