Sales of existing homes rose 0.6% month over month in July but fell 2% year over year to a seasonally adjusted annual rate of 4,094,991. That’s the lowest July level in records dating back to 2012, according to a new report from Redfin.
Meanwhile, pending sales – a more current gauge of demand that includes both existing and newly-constructed homes – fell to the lowest level of any month on record aside from April 2020, when the pandemic brought the housing market to a halt. They declined 2.9% from a month earlier and 5.8% from a year earlier – both the biggest declines in nearly a year on a seasonally adjusted basis.
Mortgage rates dropped in July and have fallen even further in August, giving house hunters more purchasing power, but buyers have been slow to react. That’s likely in part because home prices are still near their record high. 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.
“Waiting around for mortgage rates to fall further isn’t a surefire strategy,” says Redfin Senior Economist Elijah de la Campa. “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.”
There are a few encouraging signs for homebuyers aside from the dip in mortgage rates. For one, the total supply of homes for sale (active listings) rose a record 13.7% year over year in July.
Many listings on the market are getting stale as buyers grapple with high costs, which is causing supply to pile up – giving some buyers room to negotiate. The typical home that went under contract in July spent 34 days on the market, up from 29 days a year earlier and the longest of any July since 2020.
It’s worth noting that active listings did fall 0.6% from a month earlier in July – the first seasonally-adjusted decline in a year. New listings were little changed from a month earlier, and while they were up 2.9% year over year, they were still at the lowest level since last July.
Another silver lining for buyers: Only one-third of homes (33.2%) sold for more than their asking price, down from 38.2% a year earlier and the lowest share of any July since 2020.
Roughly 59,000 home-purchase agreements were canceled in July, equal to 15.8% of homes that went under contract that month – the highest percentage of any July on record. Redfin’s records for this statistic date back to 2017.
Many house hunters are getting cold feet because housing costs remain high. Economic uncertainty is also high, with recession fears on the rise.
Buyers in Florida and Texas were most likely to back out of deals. Housing markets across both states have slowed considerably since the pandemic moving frenzy, with markets on Florida’s West Coast 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%).
To view the full report, click here.
