{"id":76796,"date":"2023-09-15T05:00:23","date_gmt":"2023-09-15T12:00:23","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76796"},"modified":"2023-09-14T16:25:32","modified_gmt":"2023-09-14T23:25:32","slug":"housing-market-tracker-august-2023","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/housing-market-tracker-august-2023\/","title":{"rendered":"Home Purchases Fell Through at the Highest Rate in Nearly a Year in August"},"content":{"rendered":"

Some homebuyers got cold feet as mortgage rates hit the highest level in over two decades and prices continued to rise, but buyer demand and new listings have stabilized following months of declines.<\/span><\/i><\/h2>\n

Residential real estate deals are falling through at the highest rate in almost a year as high mortgage rates give homebuyers sticker shock.<\/span><\/p>\n

Nationwide, nearly 60,000 home-purchase agreements were canceled in August, equal to 15.7% of homes that went under contract that month. That\u2019s up from 14.3% a year earlier and marks the highest percentage since October 2022, when mortgage rates surpassed 7% for the <\/span>first<\/span><\/a> time in two decades.<\/span><\/p>\n

The average interest <\/span>rate<\/span><\/a> on a 30-year-fixed mortgage was 7.07% in August. At one point last month, it hit 7.23%\u2014the highest since 2001\u2014sending the typical homebuyer\u2019s monthly payment up <\/span>significantly<\/span><\/a> from last year.<\/span><\/p>\n

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\u201cI\u2019ve seen more homebuyers cancel deals in the last six months than I\u2019ve seen at any point during my 24 years of working in real estate. They\u2019re getting cold feet,\u201d said <\/span>Jaime Moore<\/span><\/a>, a <\/span>Redfin Premier<\/span><\/a> real estate agent in <\/span>Reno, NV<\/span><\/a>. \u201c<\/span>Buyers get sticker shock when they see their high rate on paper alongside extra expenses for maintenance, repairs and closing costs. Many of them would rather back out, even if it means losing their earnest money. A lot of sellers are also willing to let buyers slip away because they don\u2019t want to concede to repair requests.\u201d<\/span><\/p>\n

Scroll to the bottom of this report to find the deal cancellation rate for the 50 most populous U.S. metropolitan areas, along with other local insights.<\/span><\/p>\n

August 2023 Highlights: United States<\/span><\/h3>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\nAugust 2023<\/b><\/td>\nMonth-Over-Month Change<\/b><\/td>\nYear-Over-Year Change<\/b><\/td>\n<\/tr>\n
Median sale price<\/b><\/td>\n$420,846<\/span><\/td>\n-0.2%<\/span><\/td>\n3.0%<\/span><\/td>\n<\/tr>\n
Pending sales, seasonally adjusted<\/b><\/td>\n381,192<\/span><\/td>\n-0.6%<\/span><\/td>\n-18.1%<\/span><\/td>\n<\/tr>\n
Homes sold, seasonally adjusted<\/b><\/td>\n409,217<\/span><\/td>\n-1.4%<\/span><\/td>\n-14.1%<\/span><\/td>\n<\/tr>\n
New listings, seasonally adjusted<\/b><\/td>\n474,239<\/span><\/td>\n0.8%<\/span><\/td>\n-14.4%<\/span><\/td>\n<\/tr>\n
All homes for sale, seasonally adjusted (active listings)<\/b><\/td>\n1,301,871<\/span><\/td>\n-1.1%<\/span><\/td>\n-20.8%<\/span><\/td>\n<\/tr>\n
Months of supply<\/b><\/td>\n2<\/span><\/td>\n-0.2<\/span><\/td>\n-0.2<\/span><\/td>\n<\/tr>\n
Median days on market<\/b><\/td>\n30<\/span><\/td>\n1<\/span><\/td>\n4<\/span><\/td>\n<\/tr>\n
Share of for-sale homes with a price drop<\/b><\/td>\n18.4%<\/span><\/td>\n2.2 ppts<\/span><\/td>\n-1.7 ppts<\/span><\/td>\n<\/tr>\n
Share of homes sold above final list price<\/b><\/td>\n36.2%<\/span><\/td>\n-2.0 ppts<\/span><\/td>\n-1.5 ppts<\/span><\/td>\n<\/tr>\n
Average sale-to-final-list-price ratio<\/b><\/td>\n99.9%<\/span><\/td>\n-0.2 ppts<\/span><\/td>\n0.0 ppts<\/span><\/td>\n<\/tr>\n
Pending sales that fell out of contract, as % of overall pending sales<\/b><\/td>\n15.7%<\/span><\/td>\n0.5 ppts<\/span><\/td>\n1.4 ppts<\/span><\/td>\n<\/tr>\n
Average 30-year fixed mortgage <\/b>rate<\/b><\/a><\/td>\n7.07%<\/span><\/td>\n0.23 ppts<\/span><\/td>\n1.85 ppts<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Note: Data is subject to revision<\/span><\/i><\/p>\n

Home Prices Post Biggest Increase in Almost a Year<\/span><\/h3>\n

The median U.S. home sale price rose 3% year over year to $420,846 in August, the largest annual increase since October 2022, and was little changed (-0.2%) from a month earlier. It was 2.8% below the May 2022 record high of $432,780.<\/span><\/p>\n

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Activity in the housing market is sluggish due to rising mortgage rates, but prices remain high because the buyers who are out there are competing for a limited number of homes.\u00a0<\/span><\/p>\n

\u201cHome prices will likely remain elevated for the foreseeable future,\u201d said Redfin Economics Research Lead <\/span>Chen Zhao<\/span><\/a>. \u201cThe Federal Reserve still has <\/span>more work<\/span><\/a> to do in its battle against inflation, which means mortgage rates are unlikely to come down anytime soon. As long as rates remain high, homeowners will be <\/span>reluctant<\/span><\/a> to sell. And that lack of homes for sale will keep prices high because it means buyers are duking it out for a limited supply of houses.\u201d<\/span><\/p>\n

Home prices also posted a year-over-year gain in August due to the \u201c<\/span>base effect<\/span><\/a>\u201d from a year earlier; in August 2022, prices had recently started descending from their record high, which is contributing to the size of year-over-year increases we\u2019re seeing now.<\/span><\/p>\n

Buyer Demand Is Below Pre-Pandemic Levels, But No Longer in Freefall<\/span><\/h3>\n

Pending sales declined 0.6% from a month earlier in August on a seasonally-adjusted basis, and fell 18.1% year over year. While they\u2019re no longer falling as rapidly as they were earlier in 2023, pending sales remain below pre-pandemic levels. They\u2019ve been hovering below 400,000 since the end of last year, compared with nearly 500,000 just before the pandemic.<\/span><\/p>\n

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Pending sales have stabilized as the initial shock of elevated mortgage rates has moved further into the rearview mirror, but high housing costs are still keeping many buyers on the sidelines.<\/span><\/p>\n

New Listings Tick Up Slightly, But Overall Housing Supply Remains at Record Low<\/span><\/h3>\n

New listings rose 0.8% from a month earlier in August\u2014the second small uptick on a seasonally adjusted basis following nearly a year\u2019s worth of declines\u2014and were down 14.4% year over year. \"\"<\/span><\/p>\n

\u201cNew listings have likely bottomed out,\u201d Zhao said. \u201cMost of the homeowners who feel handcuffed by high rates have already made the decision not to sell. That means many of today\u2019s sellers are putting their homes on the market because they have to, in some cases due to divorce, family emergencies or <\/span>return-to-office<\/span><\/a> policies.\u201d<\/span><\/p>\n

Still, the total number of homes for sales hit a record low in August, falling 1.1% month over month on a seasonally adjusted basis and 20.8% year over year\u2014the largest annual decline since June 2021.<\/span><\/p>\n

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Housing supply is at an all-time low because homeowners feel <\/span>locked in<\/span><\/a> to their low mortgage rates; for many, selling their home and buying a new one would mean taking on a much higher monthly payment.\u00a0<\/span><\/p>\n

Metro-Level Highlights: August 2023<\/span><\/h3>\n

Data in the bullets below came from a list of the 91 U.S. metro areas with populations of at least 750,000. Select metros may be excluded from time to time to ensure data accuracy. A full metro-level data table can be found in the \u201cdownload\u201d tab of the dashboard embedded below or <\/span><\/i>in the monthly section of the Redfin <\/span><\/i>Data Center<\/span><\/i><\/a>. <\/span><\/i>Refer to our <\/span><\/i>metrics definition page<\/span><\/i><\/a> for explanations of metrics used in this report. Metro-level data is not seasonally adjusted.<\/span><\/i><\/p>\n