You don't say where you are or what type of grass you have. That would help. In northern and central parts of America, lawn renovation season is almost here. Labor Day is a good time to start as long as you don't have areas to kill off first -- I see your previous owner has done that for you already. I would suspect a fungal disease. Lawns left to grow too long will matt down and become a breeding ground for lawn fungus.

Really need to know where you live and what kind of grass you have. I can see your lawn is not a southern lawn by the way it looks, so if you happen to live in the south, then that is part of the problem.

These facts will come as a surprise to you.
1. Now is not the time to be lowering your mower. Tall grass does much better in the summer than short grass. I have about 1/2 acre of grass that is 30 inches high and it is not matting down. Other grasses might but not simply because they are tall. All I'm saying is MulchMama's statement is not universally true. At the same time, she said that the prime time to renovate is just around the corner. Depending on how far north you are, it could be NOW!

2. Now is not the time to be fertilizing with chemicals. Adding chemical stress to the heat stress (and to the mowing short stress) could deal the final blow.

The new sod looks like it was not watered 3x per day for 2-3 weeks like it should have been. Could be unrecoverable at this point. Once you have the grass established, you should be watering no more than once per week in the hottest heat of summer and transitioning to monthly in the cooler months. Mowing height is more often high than low. Unless you have creeping bentgrass, bermuda, or centipede, you should be mowing at least 3 inches and as high as 4. Here is a picture of Kentucky bluegrass mowed at the mower's highest setting.

{{gwi:86786}}

That lawn is only fertilized with organic fertilizer and is watered once every other week. Of course your watering depends on a lot of factors, but his grass doesn't show any drought stress for 2 weeks.

There is tall turf, and then there is really long turf. I'm talking about grass that is high enough to mat down, creating a breeding ground for fungal diseases. We see it in winter with snow mold on grass that wasn't cut short enough in late fall. We also see it in summer in areas that tend to hold more water.

Turfgrass can also develop certain fungal diseases in response to being overfertilized, so there's that to consider. Brown patch is an example.

We have an area like that just off our patio, and I made the mistake of emptying the dogs' kiddie pool onto it. I had mowed at 4" before the heat hit and didn't mow for almost a month after that, and that grass became too tall. It matted down and now it looks pretty awful.

I completely agree about leaving the mower deck high at this time of year. The fact that I watched the weather forecast and mowed accordingly made a huge difference. I only watered the lawn once in the month we had no rain, and it looked relatively good, considering what it was going through.

It would really help to know where the OP is located. Lawn renovation time is near of here -- but I am happy to say this is the first time in our seven seasons in Kansas when I don't have to do any overseeding!!!