Higher mortgage rates are thinning the purchase pipeline, even as lower asking prices and reduced competition give borrowers still in the market more leverage.
Seasonally adjusted U.S. pending home sales totaled 322,739 during the four weeks ending July 26, their lowest level since early April, according to a new Redfin report. Pending sales fell 1.7% from the previous four-week period but remained 1.5% above a year earlier.
Mortgage purchase applications also declined 4% during the week ending July 29, although they remained 3% above year-ago levels, according to Mortgage Bankers Association data cited by Redfin.
Rates Put More Buyers On Hold
Redfin attributed the slowdown partly to rising borrowing costs. Mortgage News Daily’s average 30-year fixed rate reached 6.85% late last week, its highest level in more than a year, before easing to 6.77% on July 30.
Freddie Mac’s weekly average rose to 6.66% for the week ending July 30, up from 6.58% a week earlier but still below 6.72% a year ago.
The increase comes with little indication that sustained rate relief is imminent. As NMP recently reported, the Federal Reserve held its benchmark rate steady this week, while three policymakers voted for an increase. MBA Chief Economist Mike Fratantoni said mortgage rates could remain near 6.5% for the foreseeable future.
Redfin said inflation concerns and volatile oil prices tied to geopolitical tensions are placing upward pressure on rates. Although the labor market remains strong, high borrowing costs and broader economic uncertainty are causing some prospective buyers to delay their searches.
Home touring activity has increased 15% since the beginning of 2026, compared with a 31% increase at the same point last year, according to ShowingTime. Google searches for “homes for sale” were down 7% from a year earlier, although they increased about 5% from the previous month.
Payments Fall Despite Higher Rates
The market presents a contradiction for borrowers: Financing has become more expensive, but sellers’ price adjustments are partially offsetting those costs.
The median estimated monthly mortgage payment fell to $2,575, its lowest level in three months and down 1.3% from a year earlier. Redfin attributed that decline to the seasonally adjusted median asking price falling to its lowest level in a year. At $392,760, however, the median asking price was unchanged from a year earlier.
That does not mean homes broadly became less expensive. The median sale price reached $407,752, up 2.8% year over year and roughly $2,000 below its record high.
Still, 20.3% of listings had a price reduction, homes spent a median of 41 days on the market, and the average home sold for 99% of its list price.
Redfin said hundreds of thousands more sellers than buyers remain in the market, giving buyers time to compare properties and negotiate. That finding also reinforces NMP’s recent coverage showing buyers have gained negotiating power in 41 of the 50 largest metropolitan areas.
Yet the national market is not unambiguously tilted toward buyers. Months of supply stood at 3.6, below the four to five months Redfin considers balanced, while 28% of homes sold above their asking prices. Those figures show that negotiating conditions remain dependent on the property and local market.
Some Sellers Are Pulling Back
Sellers are also responding to weaker demand.
Seasonally adjusted new listings declined 0.4% from the previous four-week period to 351,078, their second-lowest level since the beginning of 2026. New listings were still up 0.2% from a year earlier.
Active listings increased 0.3% from the previous period and 0.7% year over year to nearly 1.5 million.
Demand Varies Sharply By Market
National averages also obscure substantial differences among major metropolitan areas.
Pending sales fell 15.4% year over year in Houston, 13.9% in Seattle, and 12.5% in Phoenix. By comparison, pending sales increased 15.4% in West Palm Beach, 9.4% in Boston, and 8.5% in Pittsburgh.
Price trends were similarly divided. West Palm Beach recorded a 12.2% annual increase in its median sale price, while prices declined 3.3% in San Jose, 2.7% in Seattle, and 1.2% in Austin. Median sale prices declined in seven of the 50 major metros included in Redfin’s analysis.
New listings dropped most sharply in several Sun Belt markets. They declined 12.3% year over year in Fort Worth, 11.4% in Dallas, 11.3% in Miami, 9.9% in Atlanta, and 9.7% in San Antonio.
What It Means
For originators, the slowdown points to fewer active purchase borrowers but potentially greater flexibility in structuring transactions for those who remain qualified.
Reduced competition may give buyers more room to negotiate price reductions, seller-paid closing costs, repair credits, and temporary or permanent mortgage-rate buydowns. Those options may offset part of the cost of elevated rates, but they will not solve the affordability problem for every borrower.
“Rates are higher now, but bidding wars are unlikely, and buyers are often able to negotiate prices down and get concessions from sellers,” said Bonnie Phillips, a Redfin Premier agent in Cleveland.
The challenge for LOs is turning that negotiating leverage into a workable financing strategy. A lower price or seller concession can improve a transaction’s economics, but borrowers must still qualify at current rates and account for taxes, homeowners insurance, mortgage insurance, and other ownership costs.
The opportunity will also vary significantly by market. Originators working in places where pending sales and listings are contracting face a different purchase environment than those in metros where demand and prices continue to rise.
