Median home prices fell in July, marking the first-ever seasonal decline in a month that’s typically a peak time for home sales.
The national median list price dipped from $445,000 in June to $439,950 in July, according to a new monthly housing report by Realtor.com®.
This downturn can be attributed to a sluggish summer housing market, with buyers and sellers looking for more economic breaks before making a move.
“As mortgage rates fell in July to their lowest since March on expectations that the Federal Reserve will cut rates as early as September, we suppose some homebuyers may be holding out for lower rates over the next few months,” says Realtor.com senior economist Ralph McLaughlin in his analysis.
With many buyers watching mortgage rates from the sidelines, home sales are now moving at the slowest rate since 2020.
This hesitancy among buyers likely also contributed to prices being slashed on 18.9% of listings in July, up from 15.5% a year ago.
“Sellers are becoming more grounded with patience and price expectations,” McLaughlin adds.
Indeed, the share of listings with price cuts is the highest since 2022.
This all adds up to good news for buyers who have been waiting for home prices to come back down to earth.
Increase in homes for sale
While many homebuyers sat out July, those who did venture into the housing market fray had more listings to choose from than the same time last year.
The total number of homes for sale in July was 36.6% higher than the year prior, marking the ninth consecutive month of growth.
It “now sits at a post-pandemic high,” says McLaughlin. “It’s a welcome sign that the housing market is normalizing, and it tells us the market is healing.”
All four regions of the U.S. saw an increase in active home listings, with the South leading the way at 47.6%, followed by the West at 35.4%, the Midwest at 22.7%, and the Northeast at 14.7%.
Metros that saw the largest increases in the number of homes for sale included Tampa, FL, at 94.9%; Orlando, FL, at 78.7%; and San Diego at 77.7%.
Much like home prices, the jump in inventory is likely the result of one main factor: mortgage rates.
“The decrease in mortgage rates seen in July likely contributed to an increased pace of growth in listing activity,” says McLaughlin.
Where the fresh listings are
Newly listed homes surged 3.6% above last year’s levels, reflecting a notable increase in seller activity.
Buyers looking for the most fresh housing choices should head West, where there are 7.3% more newly listed homes than in July 2023. New listings also grew by 3% in the Northeast and 0.9% in the Midwest.
Only the South saw fresh listings fall, with 0.5% fewer new listings this July than last.
The metros that saw the largest increase in fresh listings compared with last year included Seattle, at 37.3%; San Jose, CA, at 30.8%; and Columbus, OH, at 17.4%.
The home price paradox
Despite the overall decline in the national median list price, it remained stable compared with the same time last year, when it was $440,000.
“However, when a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year,” says McLaughlin.
This somewhat confusing data is due to the fact that the median price per square foot continues to rise, increasing 3.1% in July compared with the same time last year.
The price per square foot in the 50 largest metros shot up between 24.1% and 81.9% compared with July 2019.
However, the rise in price per square foot has a silver lining for budget-minded buyers.
“This indicates that the inventory of smaller and more affordable homes has grown in share,” McLaughlin explains.
In July, as in the previous five months, the growth in homes priced in the $200,000 to $350,000 range outpaced all other price categories, as the number of homes for sale in this range grew by 47.3% year over year.
Homes are still lingering on the market
The typical home spent 50 days on the market in July, five more days than the same time last year and five more days than last month.
“July marks the fourth month in a row where homes spent more time on the market compared with the previous year as inventory continues to grow and home sales remain sluggish,” says McLaughlin.
However, this trend might change soon.
“We expect selling activity to continue to normalize as rates inch their way down over the next year, with potentially an unusual uptick in September if the Fed decides to cut rates,” McLaughlin predicts.
Read more at Realtor.com
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