According to the latest report from Redfin, pending home sales in July 2023 rose a meaningful 0.7% from June, which is the highest level since the start of the year on a seasonally adjusted basis—however, that number is only 5.4% above the low point hit in March.
On a yearly basis, pending home sales fell 15.7%, the smallest annual decline since the summer of 2022.
Pending home sales have stabilized recently as the shock of elevated mortgage rates has subsided. According to Redfin, pending home sales dropped to 367,000 in March, the lowest level since the pandemic began, and have been hovering around that level since then a prospective buyers continue to be discouraged by high housing costs and a lack of homes for sale.
“Home sales hit a bottom in 2022 and haven’t meaningfully budged since,” said Redfin Chief Economist Daryl Fairweather. “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.”
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.
“It’s a seller’s market, but only because there’s so little inventory,” said Salt Lake City Redfin Premier real estate agent Mitch Price. “Buyers are getting hammered by high interest rates, so they’re not just jumping on whatever is available like they were before. They don’t want to overpay, so they’re waiting for the right home. As a seller, if you overprice your home, that’s your doomsday ticket.”
Click here to view the report in its entirety.