More homebuyers are returning to the market, motivated by a decline in mortgage rates and a record share of listings with price drops, according to a new report from Redfin.
Redfin’s Homebuyer Demand Index—a measure of requests for home tours and other home-buying services—rose 7 points during the last week of July, and mortgage purchase applications rose for the first time in five weeks.
However, home sales have still declined. Pending sales in July posted their largest decline since May 2020. Home sellers are also reluctant to enter the market, with new listings falling 11% from a year ago. This marks the largest decline since June 2020.
With sales on the decline, homes also faced steady price drops. On average, 7.7% of homes for sale each week had a price drop, a record high as far back as the data goes, through the beginning of 2015.
“Homebuyers may catch a break this month as rates have come down nearly a point from the recent high on fears of a recession,” Redfin Deputy Chief Economist Taylor Marr said. “There are deals to be had on some homes that have been sitting on the market with reduced prices. General economic uncertainty may continue to keep a lid on homebuyer demand and keep mortgage rates volatile, but the labor market remains a beacon of strength in the economy and the housing market in particular.”
Several indicators measured decreasing home buying activity, including 30-year mortgage rates falling to 4.99% during the week ending August 4, the lowest level in four months. This was down from a 2022 high of 5.81%, but up from 3.11% at the start of the year.
Fewer people searched for “homes for sale” on Google. Searches during the week ending July 30 were down 24% from a year earlier, but are up 9% since late May.
Mortgage purchase applications were down 16% from a year earlier during the week ending July 29, while the seasonally-adjusted index was up 1% week over week, the first increase in five weeks.
The median home sale price was $380,187, up 8% year over year, which marks the slowest growth rate since July 2020. Prices fell 3.8% from the peak during the four-week period ending June 19. A year ago they rose 0.7% during the same period. San Francisco was the only metro area that saw a year-over-year decline in the median home sale price, with prices falling 8% from a year earlier.
The median asking price of newly listed homes increased 13% year over year to $394,375, but was down 2.6% from the all-time high set during the four-week period ending May 22. Last year during the same period median prices were down just 0.1%.
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