Existing Home Sales, Pending Sales Fall to Lowest Level Since Pandemic Start as House Hunters Wait for Mortgage Rates to Drop Further

Rhea-AI Summary

Redfin reports that existing home sales fell 1% month-over-month and 3.1% year-over-year in August 2024 to a seasonally adjusted annual rate of 4,042,369, the lowest level since May 2020. Pending sales dropped to a record low, declining 1.9% month-over-month and 2.4% year-over-year. Despite mortgage rates falling to 6.5% in August, the lowest in over a year, buyers remain hesitant due to elevated home prices. The median sale price rose 3% year-over-year to $433,101.

Positive signs for buyers include a 1.6% month-over-month increase in new listings and fewer homes selling above asking price. Only 30.2% of homes sold above list price in August, down from 36.2% a year earlier. The Federal Reserve is expected to cut interest rates, potentially leading to further mortgage rate declines.

Positive

• Mortgage rates fell to 6.5% in August, the lowest level in over a year
• New listings rose 1.6% month-over-month to the highest seasonally-adjusted level in nearly two years
• Only 30.2% of homes sold above list price, down from 36.2% a year earlier
• The Federal Reserve is expected to cut interest rates, potentially leading to further mortgage rate declines

Negative

• Existing home sales fell 1% month-over-month and 3.1% year-over-year to 4,042,369, the lowest level since May 2020
• Pending sales dropped to a record low, declining 1.9% month-over-month and 2.4% year-over-year
• Median sale price rose 3% year-over-year to $433,101, remaining elevated
• Buyers remain hesitant despite lower mortgage rates, due to high home prices and economic uncertainty

Insights

Financial Analyst

The housing market is showing signs of continued weakness, with existing home sales falling 1% month-over-month and 3.1% year-over-year to a seasonally adjusted annual rate of 4,042,369 in August. This marks the lowest level since May 2020, indicating a significant slowdown in market activity. Pending sales, a forward-looking indicator, also dropped to record lows, declining 1.9% month-over-month and 2.4% year-over-year.

Despite mortgage rates decreasing to 6.5% in August, down from 7.07% a year earlier, buyer reluctance persists. This hesitation is likely due to still-elevated home prices, with the median sale price up 3% year-over-year to $433,101. The market is showing some positive signs for buyers, including a 1.6% month-over-month increase in new listings and fewer homes selling above asking price. However, overall market conditions remain challenging, with total homes for sale up 13.3% year-over-year but still historically low.

Market Research Analyst

The current housing market dynamics reflect a complex interplay of factors affecting both supply and demand. On the supply side, we're seeing a slight uptick in new listings, rising 1.6% month-over-month to the highest seasonally-adjusted level in nearly two years. This could provide some relief to inventory-starved markets. However, total active listings remain 13.3% higher than last year, indicating persistent inventory challenges.

On the demand side, buyer behavior is notably cautious. Despite more affordable monthly payments compared to a year ago, factors such as elevated home prices, economic uncertainty and expectations of further rate drops are keeping many potential buyers on the sidelines. The 30.2% share of homes sold above list price, down from 36.2% a year earlier, suggests a shift towards a more balanced market. Regional variations are significant, with markets like San Francisco seeing increases in pending sales while Florida markets experience sharp declines, highlighting the importance of local market conditions in driving trends.

Redfin reports that sales of existing homes dropped 1% month over month in August to a seasonally adjusted annual rate of 4 million, while pending sales fell 2%

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Sales of existing homes fell 1% month over month and 3.1% year over year in August to a seasonally adjusted annual rate of 4,042,369, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the lowest level in records dating back to 2012, with the exception of May 2020, when the pandemic brought the housing market to a standstill.

Pending sales—a more current gauge of housing market activity that includes both existing and newly constructed homes—fell to the lowest level on record aside from April 2020. They were down 1.9% month over month in August on a seasonally adjusted basis, and dropped 2.4% year over year.

Mortgage rates have been declining since spring and in August dropped to the lowest level in over a year. Housing payments are now more affordable than they were a year ago. But buyers have been reluctant to respond. That’s likely in part because home prices remain elevated. The median sale price rose 3% year over year in August to $433,101. While that’s the smallest increase in almost a year, prices were still only 2.1% below their June all-time high of $442,344. Higher home prices mean buyers have to come up with larger down payments.

Redfin agents report that some house hunters are waiting to buy in hopes that rates will fall further, while others are on the sidelines because they’re confused about the new NAR rules or are waiting to see how the presidential election shakes out.

Michael Cendejas, a Redfin Premier real estate agent in Sacramento, CA, said some potential homebuyers also just haven’t realized mortgage rates are dropping. Many had heard that rates would fall in September, so they weren’t watching out for rate declines before this month, he said. Cendejas is seeing renewed buyer interest now that it’s September, but said a lot of house hunters still want to see rates in the 5% range before they jump into the market.

“There’s no sense of urgency. Buyers are selective right now, especially if they have a house already. They’re looking for the perfect home at the right price,” he said. “There aren’t a lot of desirable homes out there right now, and the ones that are in good shape go quickly if they’re priced well. My advice to sellers is to price your home fairly; if you don’t, it could end up sitting on the market.”

The average interest rate on a 30-year mortgage fell to 6.5% in August from 7.07% a year earlier—the first annual decline in three years. Rates dropped 0.35 percentage points from a month earlier, which was the largest monthly decline since the end of 2023. They’ve fallen further since, dropping to 6.2% during the week ending Sept. 12, but are still more than double the all-time low hit during the pandemic.

The Federal Reserve is expected to cut interest rates for the first time in four years today—either by 25 or 50 basis points—and continue through 2025. Mortgage rates may fall in response, but it’s unclear by how much because markets have already priced in a fairly fast pace of rate cuts.

August 2024 Housing Market Highlights: United States

	August 2024	Month-over-month change	Year-over-year change
Median sale price	$433,101	-1.3%	3%
Existing home sales, seasonally adjusted annual rate	4,042,369	-1%	-3.1%
Pending sales, seasonally adjusted	453,406	-1.9%	-2.4%
Homes sold, seasonally adjusted	411,822	-0.8%	-2.5%
New listings, seasonally adjusted	526,740	1.6%	2.1%
Total homes for sale, seasonally adjusted (active listings)	1,636,415	-0.3%	13.3%
Months of supply	2.6	0	0.5
Median days on market	37	3	6
Share of homes sold above final list price	30.2%	-3.1 ppts	-6 ppts
Average sale-to-final-list-price ratio	99.3%	-0.4 ppts	-0.6 ppts
Pending sales that fell out of contract, as % of overall pending sales	15.6%	0.4 ppts	0.8 ppts
Average 30-year fixed mortgage rate	6.5%	-0.35 ppts	-0.57 ppts

Note: Data is subject to revision

Hopeful Signs for Buyers: New Listings Tick Up, Fewer Homes Sell for Above the Asking Price

There are a few pieces of good news for homebuyers in addition to falling mortgage rates. Housing supply is inching up, which means more options to choose from. New listings rose 1.6% month over month in August to the highest seasonally-adjusted level in nearly two years, and climbed 2.1% from a year earlier.

Plus, homes are less likely to sell for above their list price. Less than one-third of homes (30.2%) that sold in August went for more than their asking price, down from 36.2% a year earlier and the lowest share of any August since 2019.

The typical home that went off the market sold for 99.3% of its list price, down from 99.9% a year earlier and also the lowest August level since 2019.

Metro-Level Highlights: August 2024

The bullets below are based on a list of the 50 most populous U.S. metropolitan areas. Some metros may be removed from time to time to ensure data accuracy. All changes below represent year-over-year changes.

• Prices: Median sale prices rose most from a year earlier in Nassau County, NY (10%), Philadelphia (9.1%) and Milwaukee (8%). They fell in seven metros, with the biggest declines in San Antonio (-4.4%), Austin, TX (-4.4%) and San Francisco (-2.2%).
• Pending sales: Pending sales rose most in San Francisco (12.3%), San Jose, CA (6.7%) and San Diego (4.4%). They fell most in West Palm Beach, FL (-17.6%), Fort Lauderdale, FL (-17.2%) and Miami (-15.1%).
• Closed home sales: Home sales rose most in San Francisco (5.3%), San Jose (4%) and Newark, NJ (3.3%). They fell most in West Palm Beach (-17.1%), Miami (-13.6%) and Fort Worth, TX (-12.9%).
• New listings: New listings rose most in Las Vegas (12.8%), San Diego (11.7%) and Sacramento, CA (9.5%). They fell most in Atlanta (-19.4%), Portland, OR (-14.6%) and Newark (-10.6%).
• Active listings: Active listings rose most in Tampa, FL (50.1%), Fort Lauderdale (46.4%) and San Diego (41.9%). They fell most in New York (-5.4%), Newark (-4.4%) and Chicago (-3.8%).
• Sold above list price: In Newark, 68.5% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came San Jose (60.5%) and Nassau County (56.5%). The shares were lowest in West Palm Beach (7%), Austin (10.8%) and Fort Lauderdale (11.6%).

To view the full report, please visit: https://www.redfin.com/news/home-sales-lowest-since-pandemic-2024/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240918082048/en/

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

What happened to existing home sales in August 2024 according to Redfin (RDFN)?

Existing home sales fell 1% month-over-month and 3.1% year-over-year to a seasonally adjusted annual rate of 4,042,369 in August 2024, reaching the lowest level since May 2020.

How did pending home sales perform in August 2024 for Redfin (RDFN)?

Pending sales dropped to a record low in August 2024, declining 1.9% month-over-month and 2.4% year-over-year.

What was the median sale price for homes in August 2024 according to Redfin's (RDFN) report?

The median sale price rose 3% year-over-year to $433,101 in August 2024.

How did mortgage rates change in August 2024 based on Redfin's (RDFN) data?

The average interest rate on a 30-year mortgage fell to 6.5% in August 2024, the lowest level in over a year.