US home sales rose 7% in July but future sales slow as mortgage rates hit a year high.

US home sales increased 7% year-over-year in July, marking the strongest annual gain this year, largely reflecting deals made in June when mortgage rates were lower. However, newly pending sales, a key indicator of future closings, grew only 0.3% year-over-year and fell 7.7% from June, signaling a slowdown ahead due to rising mortgage rates hitting their highest level in a year. Inventory rose slightly by 1.5% year-over-year, supported by a 3.1% increase in new listings. Experts warn that the affordability advantage may vanish if mortgage rates continue to rise, potentially leading to flat or declining home sales for the rest of the year.