REUTERS/Jessica Rinaldi

Americans purchased the most previously-owned homes in five months in July, signaling renewed strength in the residential real estate market.

The National Association of Realtors said existing-home sales hit a 5.42 million annual rate in July, up 2.45% from a slight decline in June.

The uptick in sales was partially fueled by lower mortgage rates, indicating the Federal Reserve's move toward lower interest rates could be bolstering the US economy.

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Americans still appear to have an appetite for real estate.

US existing-home sales hit a five-month high in July, defying hints of an approaching economic slowdown. They climbed to an annual rate of 5.42 million in July, a 2.45% jump from a slump in June, according to the National Association of Realtors.

The rebound in the residential real estate market is a positive sign for the US economy amid the flurry of recession signals that have appeared across the globe in recent weeks.

The increase in sales was partially due to lower mortgage rates, suggesting the Federal Reserve's shift toward lower interest rates could be benefiting the economy. Chairman Jerome Powell is scheduled to speak at the Jackson Hole Symposium later this week, and investors keeping a close watch for any comments regarding the future direction of borrowing costs.

"Falling mortgage rates are improving housing affordability and nudging buyers into the market," Lawrence Yun, the association's chief economist said in a statement.

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While low rates are bringing new buyers to the market, there's also a shortage of low-priced homes which is pushing up prices, Yun added. There were a total of 1.89 million previously-owned homes available to purchase at the end of July, down from 1.92 million in June.

The decrease in inventory boosted the median selling price for all housing types to $280,000, up 4.3% from the same month last year. July also marked the 89th-consecutive month of year-over-year price gains.

Daniel Silver, an economist at JPMorgan, echoed Yun's sentiment on the improving market.

"It does look like home sales have firmed so far this year in response to lower mortgage rates," Silver said in a note to clients on Wednesday. "July was the second strongest month for existing home sales since April 2018."

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