Existing home sales dropped to their lowest July level in 12 years this year, rising just 0.6% month over month, according to a new report from Redfin.
Sales fell 2% from last year, reaching a seasonally adjusted level of 4,094,991.
Pending sales – which declined by 2.9% from a month earlier and 5.8% from 2023 – fell to their lowest level of any month on record since April 2020, gauging the timidness of prospective buyers.
That sentiment is likely to change this fall, according to housing analysts from Zillow, who predict mortgage rate relief will motivate house-hunters to resume their search.
Mortgage rates dropped in July and have fallen even further in August — giving buyers more purchasing power. But they have been slow to react, in part due to continued high home prices. The median sale price rose 4.1% year over year in July to $439,170. That’s just 0.7% below the all-time high of $442,389 set the prior month.
“When rates finally dropped, buyers got excited and we saw more activity. But now that rates have fallen to the mid-6% range, people have been waiting to see if they’ll drop even more. Home prices are going up, though, so it really becomes six of one, half dozen of the other, ” said Nicole Stewart, a Redfin real estate agent in Boise, Idaho. “A lot of people are also concerned about the political climate. They can afford to buy, but have been holding off because it’s unclear where the country will be in six months. Though in reality, who is in the Oval Office probably won’t have much of an impact on the housing market.”
Redfin Senior Economist Elijah de la Campa encouraged prospective buyers to take the leap.
“Waiting around for mortgage rates to fall further isn't a surefire strategy,” de la Campa said. “If you have the means to buy and have been thinking about doing so, now actually might not be a bad time. That’s because mortgage rates have fallen enough to boost your purchasing power, but not enough to bring tons of buyers off of the sidelines and drive up competition.”
Mortgage rates aside, active listings rose a record 13.7% YOY in July, 0.6% below their June rate. The typical home that fell under contract in July spent 34 days on the market, up from 29 days a year earlier and the longest time on the market of any July since 2020.
New listings were up 2.9% year over year, but still at their lowest level since last July.
Just one-third of homes (33.2%) sold above their asking price, down from 38.2% a year earlier and the lowest share of any July since 2020.
More home-purchase agreements were canceled in July than any other July on record, dating back to 2017, at a rate of 15.8%.
Metropolitan areas along Florida’s west coast are cooling faster than anywhere else in the nation, amid rising supply and a climate-fueled insurance crisis. In Tampa, 1,266 home-purchase agreements were canceled in July, equal to 21.9% of homes that went under contract that month — a higher share than any other major metro. Next came Fort Lauderdale (21.8%) and San Antonio (21.8%).
The shares were lowest in Nassau County (5.4%), San Francisco (6.1%), and San Jose (7%).
Median sale prices rose most from a year earlier in New Brunswick, NJ (14.6%), Detroit (13.5%) and Newark, NJ (12%), falling in just two metros – Austin, TX (-2.6%) and Dallas (-1.2%).
