It's normal for people to feel sluggish in the dog days of summer, but that’s not typical of the housing market. Yet, Redfin's latest report found that housing activity has been moving at a snail's pace for the past five months. In an unseasonably cool market in August, half of all US listings lingered for at least 60 days before getting sold, up from 43.2% a year ago. This also marks the fifth straight month in which the share of homes sitting 60-plus days on the market increased.
Redfin Senior Economist Sheharyar Bokhari noted that despite lower mortgage rates already being priced in before the Fed’s September rate cut, August home sales dropped to the lowest level since the start of the pandemic.
“We usually see home sales pick up when mortgage rates fall, but this year we are seeing the opposite -- sales are dropping and homes are sitting longer on the market,” said Bokhari. “Last week’s big interest rate cut by the Federal Reserve will give buyers a boost in confidence, but it remains to be seen whether sales will speed up in any meaningful way as we move into the slower Fall season.”
Last month, Redfin found nearly 70% of homes had been sitting for at least a month (30 days), up from 63.9% a year ago. This marks the sixth consecutive month that the share of month-old listings increased. A Redfin premier agent based in Austin, Texas, stated that bidding wars on homes are few and far between.
“For a home to sell fast, or with multiple bids, it needs to be immaculately presented and have a unique design, or additional features like a pool,” said Andrew Vallejo, Redfin Premier agent in Austin, TX. “I had a home receive multiple offers about a month ago — a rarity for us at the moment. It sold quickly and for $25,000 over list price because of how pretty it was — everything was perfectly painted, clean and manicured.”
Redfin also determines the speed of the market by looking at the median number of days it takes for homes to find a buyer. Though Redfin Chief Economist Daryl Fairweather said desirable homes still sell quickly, there are some too stale for any homebuyers to bite.
“Now if a home is still on the market after a few weeks, buyers assume there's something wrong with it,” Fairweather pointed out. “That's why it's so important to price your home to move quickly. Buyers see the days on market, and when it starts to tick up, it's like a scarlet letter."
Bay Area Buyers Could Save Thousands
However, a separate report from Redfin may stir some action among homeowners in California's Bay Area, who stand to save thousands on monthly payments following the recent mortgage rate decline.
Mortgage rates have fallen to 6.1% compared to 7.2% in the spring, pushing housing payments down by thousands of dollars in the Bay Area and hundreds of dollars in most other major metros. San Jose, CA, saw the biggest drop in monthly housing payments, falling more than $2,000 from its springtime peak, landing at $9,398 in mid-September. Home prices also fell from their peak, causing San Jose’s median sale price to drop about 7% over that period.
The next-biggest drops in median housing payments, from April to mid-September 2024, were in San Francisco where the median payment dropped by $1,372, and in Oakland where it dropped by $1,338. Southern California metros round out the top five with an $840 decline in Anaheim and a $670 decline in Los Angeles.
However, Redfin’s report forecasted that mortgage rates are unlikely to drop much further, stating that, "markets had already priced in the Fed’s rate cut prior to last week, and the upcoming Fed rate cuts may push mortgage rates down to around 5.7%—but not much lower. Plus, home prices may increase as lower rates bring back demand.”
“House hunters who have been waiting on the sidelines for costs to fall should seriously consider jumping into the market now,” said Chen Zhao, Redfin’s economic research lead. “We’re in a sweet spot for buyers. This may be close to the bottom for housing payments, especially in expensive and desirable coastal markets. Mortgage rates have fallen about as much as they’re going to fall, and we’re already seeing demand surge back. If supply doesn’t increase as much as demand, price growth is likely to rise.”
