According to a new report from Redfin, July pending home sales rose 0.7% from a month earlier to the highest level since the start of the year on a seasonally adjusted basis, but were still only 5.4% above the low point hit in March. Pending sales fell 15.7% year over year, the smallest annual decline since last summer.
Pending sales have stabilized as the shock of elevated mortgage rates has subsided. They dropped to 367,000 in March – the lowest since the onset of the pandemic – and have been hovering around that level ever since (they clocked in at 387,000 in July) as prospective buyers continue to be discouraged by high housing costs and a lack of homes for sale.
“Fading recession fears and the prospect of further home price increases have brought some house hunters off the sidelines, but for the most part, buyers remain hesitant to jump into the market because their buying power is so much lower than it was a year ago,” says Daryl Fairweather, Redfin chief economist.
The average 30-year-fixed mortgage rate was 6.84% in July, up from 6.71% a month earlier and 5.41% a year earlier – and it has climbed even higher since. As of Thursday, it was 7.23% – the highest since 2001. That, along with stubbornly high home prices, has sent the typical homebuyer’s monthly mortgage payment up substantially from a year ago.
The median home sale price rose 1.7% year over year to $421,872 in July – the first annual increase since the start of the year. That’s just 2.5% below the record high of $432,476 set in May 2022.
Housing prices have remained high despite sluggish homebuyer demand because there are so few homes on the market, meaning the buyers who are out there are frequently competing for a small pool of properties.
The total number of homes for sale (active listings) fell 3.9% month over month in July to the lowest level on record on a seasonally adjusted basis, and dropped 19.5% from a year earlier. That’s the biggest annual decline in more than two years.
Housing supply is dwindling because high mortgage rates are dissuading homeowners from selling. New listings in July were little changed from a month earlier, rising 0.5% on a seasonally adjusted basis, but they were down 22.2% from a year earlier
Metro-Level Highlights for July 2023:
Pending sales: In Bridgeport, Conn., pending sales fell 55.1% year over year, more than any other metro Redfin analyzed. The smallest declines were in Detroit (-1.2%) and El Paso, Texas (-1.2%).
Closed sales: In New Haven, Conn., closed home sales dropped 30.5% year over year, more than any other metro Redfin analyzed. Closed sales rose in just one metro: North Port, Fla. (4.3%).
Prices: The biggest declines were in Austin, Texas (-10.5%), Detroit (-7%) and Honolulu (-6.2%). The biggest increases were in Dayton, Ohio (12.2%), Miami (11.7%) and Camden, N.J. (9.7%).
Listings: New listings fell most from a year earlier in Bridgeport, Conn. (-51.4%). They rose in one metro – McAllen, Texas (2.5%).
Supply: Active listings fell most from a year earlier in Bridgeport, Conn. (-49.8%). They rose most in New Orleans (33.4%).
Photo by Mitchell Luo on Unsplash