U.S. home sales dropped to their lowest level in nearly two years in July, but the national decline conceals a purchase market increasingly being driven by local employment, inventory, and borrower wealth.
Closed sales fell 4.1% from June on a seasonally adjusted basis, according to a Redfin report released Wednesday. Pending sales declined 2.5% to their lowest level since December.
The pullback came as the median home-sale price rose 3.2% from a year earlier to $407,730, the highest July level on record. The average 30-year fixed mortgage rate increased to a one-year high of 6.54% during the month.
That combination left buyers with little relief: fewer transactions, but no broad retreat in prices.
“The housing market suffered from a mid-summer slump in July as would-be buyers grappled with record-high home prices, increasing mortgage rates and growing financial insecurity,” said Chen Zhao, Redfin’s head of economics research.
“Many Americans simply can’t afford today’s housing costs, while others are holding off because they’re worried about the economy and/or their job security,” Zhao continued. “The silver lining is that the buyers who can afford a home may be able to negotiate on price and get concessions from sellers who are eager to offload their house.”
One Slowdown, Different Causes
The national sales figure tells originators how much purchase business is available. The metro-level data offer a better indication of what it will take to capture that business.
Texas recorded three of the five largest annual declines in closed sales. Sales fell 12.6% in San Antonio, 10% in Dallas, and 9.9% in Fort Worth.
Redfin attributed part of the slowdown to years of homebuilding that have given buyers more choices and reduced their urgency to purchase. Resale sellers in some neighborhoods are also competing against builders offering financing and other incentives.
That presents a particular challenge for independent originators. More inventory can create purchase opportunities, but it does not guarantee that financing remains open to outside lenders when builders use rate buydowns, closing-cost assistance, or other incentives to steer borrowers toward affiliated or preferred mortgage providers.
Seattle’s slowdown has a different source. Pending sales declined 15.6% annually, the steepest drop among the metros Redfin analyzed, while closed sales fell 9.1%.
The metro’s median sale price remained $809,479, nearly twice the national median. Redfin also pointed to layoffs and uncertainty in the technology industry as reasons buyers are delaying purchases.
“Seattle is a tech-driven market, and right now a lot of buyers are feeling cautious about layoffs, AI and job security,” said Chase Costello, a Redfin Premier agent in the Seattle area. “Tech workers aren’t moving between companies — or moving into the area — as much as they used to, and that means fewer people are trading up into new homes.”
Costello said buyers remain in the market but are taking longer and approaching major purchases more carefully.
For originators, that kind of hesitation cannot necessarily be overcome with a better rate quote or seller credit. Concerns about continued employment can affect whether borrowers apply, how confidently they proceed after approval, and whether a signed contract reaches closing.
More Leverage, Fragile Closings
Fourteen percent of pending home-sale agreements were canceled in July, up 0.7 percentage points from a year earlier and 0.3 points from June.
Contract fallout is particularly important for originators because a slower market can require more work for every funded loan. Borrowers may have greater negotiating power, but additional inspections, repair requests, appraisal concerns, and financing changes can create more points at which a transaction can collapse.
Seller concessions are increasingly helping bridge affordability gaps. A record 46.2% of sellers offered concessions in May, according to an earlier Redfin report.
But July’s weaker sales and higher cancellation rate show the limit of that leverage. A credit or temporary rate buydown can improve the economics of a transaction. It cannot fully offset a borrower’s fear of losing a job or taking on a near-record housing payment.
Not Every Market Is Retreating
Demand remained strong in several metros, further separating the local purchase markets from the national trend.
Closed sales rose 17.1% annually in West Palm Beach, Florida, 8.5% in San Francisco, and 7% in Milwaukee. Pending sales increased 14.2% in West Palm Beach, 4.5% in Milwaukee, and 3.9% in Pittsburgh.
Redfin said affluent buyers were supporting activity in West Palm Beach and San Francisco, with the artificial intelligence boom providing an additional lift in San Francisco. That follows a broader divide NMP identified earlier this year, when luxury sales strengthened while middle-market buyers remained constrained by financing costs.
Milwaukee’s advantage was affordability. Its median sale price was approximately $383,805, below the national median, while its inventory of homes for sale increased.
Those markets require different origination strategies. High-wealth metros may generate jumbo and lower-leverage opportunities among borrowers less sensitive to rate movements. More affordable markets may offer stronger conventional, FHA, and VA potential. Texas may require originators to compete directly with builder-funded incentives, while Seattle calls for closer attention to employment stability and pipeline fallout.
Sellers Are Pulling Back, Too
New listings declined 0.1% from June to their lowest level since October 2024. Active listings fell 0.3%, while the median time on market remained unchanged at 49 days.
Redfin said elevated mortgage rates continue to discourage homeowners from listing and giving up lower-rate loans. Some prospective sellers are also waiting because they see how slowly other homes are moving.
That matters because July was not a straightforward shift toward abundant inventory and lower prices. Buyers pulled back, but sellers did, too. The result was fewer transactions without a corresponding national price decline.
For originators, the purchase market is no longer defined by a single obstacle that can be solved with a single pitch. The borrowers are different, the reasons for hesitating are different, and the competition for their financing is different from one metro to the next.
