July brought more bad news for hopeful homebuyers. Mortgage rates remain elevated at close to 7% and real estate broker Redfin cites data showing home prices are still going up.
In early July, Redfin found that the median home sale price had risen another 5% over the last 12 months, even as fewer homes sold and inventories of homes grew.
The median U.S. home-sale price hit an all-time high of $397,482 during the four weeks ending July 7, up 4.7% year over year–the biggest increase in over four months.
But Redfin sees signs that home price growth is about to lose momentum. Nationally, the typical home is selling for 0.4% less than its list price.
That’s significant because it’s the first time that has happened since July 2020, when the rapid escalation in home prices began. At the same time, only 32% of homes are selling above asking price, down from 36% a year ago and the lowest share at this time of year since 2020.
Buyers remain frustrated because home prices have remained stubbornly high despite elevated mortgage rates reducing the number of people willing to pay. Supply and demand is usually expected to lower prices in that scenario. Pending home sales are down 3.5% year over year and mortgage-purchase applications are down 13%.
So why aren’t prices in a free fall? Well, even though inventory levels are rising they are still near record lows.
Hope for buyers
But here is a glimmer of home for buyers: New listings are up 7.3% year over year, and the total number of homes for sale is up 18.3%, with most homes for sale growing stale. More than 60% of homes are on the market for at least a month without going under contract.
“Homes are sitting longer than they usually do this time of year, which has led to some–but not all–homes selling for a little bit less,” said Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area. “The longer rates stay high, the pickier buyers are getting.”
Zubiate says that fact holds lessons for people who are thinking about selling their homes. She says sellers should take the time to prep, price and promote their homes correctly to find the right buyer.
Homes that sell the fastest? Move-in ready homes with big backyards located in desirable school districts.