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Existing home sales in the U.S. showed a notable rebound in the month of July, according to a report released by the National Association of Realtors on Wednesday.

NAR said existing home sales jumped by 2.5 percent to an annual rate of 5.42 million in July after slumping by 1.3 percent to a revised rate of 5.29 million in June.

Economists had expected existing home sales to surge up by 2.3 percent to a rate of 5.39 million from the 5.27 million originally reported for the previous month.

"Falling mortgage rates are improving housing affordability and nudging buyers into the market," said NAR chief economist Lawrence Yun.

However, Yun noted the supply of affordable housing is severely low, adding, "The shortage of lower-priced homes have markedly pushed up home prices."

The report said the median existing home price for all housing types in July was $280,800, down 1.6 percent from $285,300 in June but up 4.3 percent from $269,300 in the same month a year ago.

Total housing inventory decreased to 1.89 million existing-homes available for sale at the end of July from 1.92 million at the end of June.

The unsold inventory represents 4.2 months of supply at the current sales pace, down from 4.4 months in June and 4.3 months in July of 2018.

NAR said single-family home sales spiked by 2.8 percent to an annual rate of 4.84 million in July, while existing condominium and co-op sales were nearly flat at 580,000.

The report also showed existing home sales rose in the Midwest, South and West but fell slightly in the Northeast region.

On Friday, the Commerce Department is scheduled to release a separate report on new home sales in the month of July. New home sales are expected to come in nearly unchanged in July after soaring by 7.0 percent in June.