Most signs point to a cooling housing market. Pending home sales posted their smallest year-over-year increase (7%) since late June 2020. The supply of homes for sale continued to plateau as the number of newly listed homes for sale followed its slow seasonal decline.
Home sale prices–a lagging indicator and a notable exception to the cooling trend–continued their steady ascent, up 19% year over year. Homebuying competition passed its lofty peak; the majority of homes are still finding buyers within two weeks and selling for above their asking price, leaving many buyers wondering when they may start to feel the chillier conditions.
Some of those buyers have grown weary, with online home searches, in-person tours and mortgage applications all on the decline.
It seems that some home sellers have realized the market is falling a bit out of their favor, as asking prices have been slowly sliding from their late-June high. A small but growing number of sellers are figuring that out the hard way–4.5% lowered their list price, the highest share since November 2019.
“Home sellers are increasingly having to lower their expectations,” said Redfin Chief Economist Daryl Fairweather. “Many homebuyers have turned to the rental market amid such high home prices, but now with rental prices growing, I expect many will return to the housing market by spring of next year. The transition to this new slightly cooler phase of the housing market will happen unevenly depending on the location and the desirability of the home. If you are currently looking to buy a home, I recommend that you do your research on how much attention the home is getting before you put in your offer. If you find a home without any other offers, you may be able to get it for below the list price and with inspection and financing contingencies intact.”
Unless otherwise noted, the data in this report covers the four-week period ending July 25. Redfin’s housing market data goes back through 2012.
Refer to our metrics definition page for explanations of all the metrics used in this report.
