In July, the existing home sales in the United States experienced a notable decline, hitting the lowest levels recorded since 2012. This downturn is primarily attributed to the waning demand following previously decreased mortgage rates and persistent home prices that remain near historic highs, according to Redfin, a prominent real estate brokerage, which reported these findings on Monday. The sales of pre-owned homes achieved a seasonally adjusted annual rate of 4.1 million last month, which reflects a 2% drop from July of the previous year.
Interestingly, this figure marks a 0.6% uptick when compared to June’s sales. However, the most concerning statistic from the report is the substantial decline in pending sales. Described as a more immediate indicator of market demand, pending sales, which encompass both existing and newly constructed homes, reached their lowest level ever recorded—excluding the severe impacts of April 2020 during the pandemic-induced lockdowns. Pending sales declined by 2.9% compared to the previous month and fell 5.8% year over year, marking the biggest drop seen in nearly 12 months, according to seasonally adjusted data. Interestingly, mortgage rates saw a decrease in July, yet buyers appeared sluggish in responding to these changes, as mentioned in Redfin's analysis.
The average 30-year fixed mortgage rate decreased to 6.73% as of August 1, down from 6.95% on July 3, based on information sourced from Freddie Mac. Nicole Stewart, a real estate agent at Redfin, stated, "When rates finally dropped, buyers got excited and we saw more activity. But now that rates have fallen to the mid-6% range, people have been waiting to see if they'll drop even more." Rising home prices have seemingly created a barrier for many potential buyers.
The median sales price ascended by 4.1% year over year in July, marking $439,170, which is a figure just 0.7% shy of breaking its all-time record high established in June. Elijah de la Campa, Senior Economist at Redfin, remarked, "If you have the means to buy and have been contemplating it, now actually might not be a bad time.
This is because mortgage rates have decreased sufficiently to enhance your purchasing power while not luring a flood of buyers back into the market, which could intensify competition." On the listings front, new listings held steady at a seasonally adjusted rate of 494,500 from June to July, reflecting a 2.9% increase year over year.
However, supply saw a slight decline of 0.1% on a sequential basis, totaling 2.6 months in July, although it was up 0.3% compared to July 2023. Notably, approximately 33% of homes sold exceeded their final list prices, which is a decline of 1.9 percentage points from June and a notable 4.9 points year over year. Overall, the data paints a complex picture of the current real estate landscape, indicating cautious optimism amid ongoing challenges and shifts in buyer behavior as the market continues to adjust to new realities..