What are the implications of these findings for the housing market?
Sales of existing homes in the US increased by 0.6% in July, marking a slight month-over-month improvement but falling 2% year-over-year, according to a recent report by Redfin. This seasonally adjusted annual rate of 4.09 million homes sold is the lowest level for July since Redfin began tracking data in 2012. Despite a drop in mortgage rates, homebuyers remain hesitant, largely due to persistent high prices.
Pending sales, a key indicator of future market activity, saw significant declines. July pending sales dropped 2.9% from June and 5.8% from the previous year, reaching the lowest level since April 2020. Redfin suggested this reflects growing caution among buyers, who are concerned about both high housing costs and economic uncertainty. Mortgage rates, though lower than in previous months, have not spurred a significant increase in buyer activity. The median sale price for a home in July rose 4.1% year-over-year to $439,170, just below the all-time high set in June.
Redfin agents noted that while some buyers showed initial enthusiasm when rates began to fall, many are now waiting to see if rates decrease further. Nicole Stewart, a Redfin agent in Boise, Idaho, highlighted that some potential buyers are also hesitant due to concerns about the political climate, even though these factors are unlikely to have a direct impact on the housing market in the short term.
The report also identified a few positive trends for prospective homebuyers. Active listings have increased by 13.7% year-over-year, providing more options for buyers. Additionally, the share of homes sold above asking price fell to 33.2%, down from 38.2% a year earlier. Despite this, the housing market remains challenging, with the typical home spending 34 days on the market, up from 29 days last year, reflecting buyer caution.
Hesitation among prospective homebuyers
One of the notable shifts in the market is the rising number of deal cancelations. In July, approximately 59,000 home-purchase agreements were canceled, representing 15.8% of all pending sales—the highest percentage for any July on record. Florida and Texas saw the highest cancelation rates, particularly in markets like Tampa and Fort Lauderdale.
Across the country, median sale prices rose most sharply in New Brunswick, New Jersey (14.6%), Detroit (13.5%), and Newark, New Jersey (12%). In contrast, prices fell slightly in Austin, Texas (-2.6%) and Dallas (-1.2%). The market saw significant gains in pending sales in San Francisco, San Jose, and Newark, while Houston, Minneapolis, and Atlanta experienced significant declines.
Redfin’s senior economist Elijah de la Campa cautioned against waiting for further declines in mortgage rates, noting that while current conditions offer slightly better purchasing power, waiting could lead to increased competition if more buyers return to the market.
“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,” he noted.
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