In August, existing and pending home sales in the United States experienced a significant decline, hitting their lowest levels since the second quarter of 2020, as reported by Redfin. The sales of existing homes fell by 1% month-over-month and were down 3.1% compared to August 2022. Notably, this decline marks the lowest level recorded in Redfin's data history dating back to 2012, with the exception of May 2020, when the COVID-19 pandemic caused a standstill in real estate transactions. Pending home sales, which provide a more current snapshot of housing market activity and encompass both existing and new homes, also saw a downturn.
They decreased by 1.9% sequentially and 2.4% year-on-year, reaching the lowest point since April 2020. This data underscores a continuing trend where buyers are adopting a selective approach, especially those who already own homes. As Redfin Premier's real estate agent Michael Cendejas noted, "They’re looking for the perfect home at the right price." Despite a recent easing in mortgage rates, affordability remains a pressing concern.
The Mortgage Bankers Association revealed that the 30-year fixed rate for conforming loan balances recently dropped to its lowest level since September 2022, bringing a glimmer of hope to potential buyers. However, the rise in housing prices continues to exert pressure on monthly housing expenses, complicating the landscape for prospective homeowners.
The median home sales price showed a modest increase of 3% in August, reaching $433,101. This represents the smallest increase observed in nearly a year and positions the current prices just 2.1% away from the all-time high recorded in June. In light of the recent mortgage rate fluctuations, many homebuyers are maintaining their purchase decisions, choosing to wait in anticipation of further rate decreases. Encouragingly for buyers, new listings witnessed a growth of 1.6% in August, marking the highest seasonally adjusted level in almost two years.
This spike in inventory could provide additional choices for those looking to purchase a home, enhancing the likelihood of finding suitable properties amid the ongoing shifts in the market. Overall, the current U.S. housing market reflects a complex interplay of declining sales, selective buyer behavior, and fluctuating interest rates, setting the stage for a dynamic fall season ahead.
The influence of the Federal Reserve, which cut interest rates by 50 basis points in its first move since March 2020, will likely continue to be felt across the housing sector as market participants adapt to new financial realities..