Buyers have more options, negotiating power as demand slumps
Mortgage rates changed little in response to new jobs and inflation data, but sellers are still increasingly outnumbering buyers in a sign of weakening demand.
Key points:
- The 30-year fixed-rate mortgage averaged 6.67% this week, higher than this time last year but slightly below last week’s average.
- Redfin estimates the housing market had 51.3% more sellers than buyers in July, an indication that buyers are dropping out of the market faster than sellers as rates and home prices remain elevated.
- Signals of weakening demand are also popping up in the form of asking price reductions, which have been increasing in recent weeks.
New labor market and inflation data released over the past week revealed little change in the national economy, likely setting the housing market up for continued sluggishness in the final weeks of the summer.
The July jobs numbers came in weaker than expected, and data released Aug. 12 unsurprisingly showed that inflation remained elevated at an annual rate of 3.4% — down just slightly from 3.5% in June — amid the ongoing war in the Middle East.
Mortgage rates haven't changed much in light of these latest data points, with Freddie Mac pegging the 30-year rate at 6.67% on Aug. 13. Though down slightly from last week's average of 6.69%, rates are still higher than a year ago, when the 30-year rate was at 6.58%.
"While it's certainly good news that inflation did not surprise us by coming in hotter than expected, a cooler readout could have given the Federal Reserve more pause on what looks like an upcoming rate hike before the end of 2026 after holding rates late last month," Realtor.com Senior Economist Joel Berner said.
Increasingly more homesellers than buyers
Persistently elevated rates and rising home prices are leading to fewer homebuyers as demand droops. Redfin estimates the housing market had 51.3% more sellers than buyers last month — just below the December 2025 peak of 51.8% more sellers than buyers, the highest share in the report's records dating back to 2013.
The total number of buyers in the market dropped 2.5% in July compared to June, while the seller total fell just 0.3%.
"Buyers are dropping out faster than sellers, giving the buyers who remain more options and more negotiating power," said Asad Khan, a senior economist at Redfin. "That makes the stretch between now and Labor Day a potential sweet spot for people who need to move: Buyers have leverage, while motivated sellers may be willing to negotiate before the early-fall rush brings some buyers back to the market. This could be the best chance for buyers and sellers to meet in the middle."
2 in 5 active listings have cut asking price
Weakening demand is also surfacing in listing price reductions. Mike Simonsen, chief economist at Compass, noted in his weekly YouTube update that 41.4% of active listings have cut their original asking prices, a share nearing last year's peak and well above the levels recorded in 2023 and 2024.
"It's a pretty clear signal that homebuyers are slowing down as mortgage rates hit their 12-month highs," Simonsen said.
After last year's slow summer season, demand improved in the fall when 30-year mortgage rates began trending down. That could happen again if mortgage rates start moving in the right direction.
"Sellers should pay attention to the price cut trends in their local markets," Simonsen said. "If we're lucky — we get some good news, for example, in the Middle East — then maybe we get some home affordability improvements for homebuyers in the next few months."
Small boosts in loan applications, pending sales
Though mortgage applications and pending home sales are still at low levels, both have recorded recent upticks.
Overall mortgage activity was up 3.6% for the week ending Aug. 7 compared to the week before, according to the Mortgage Bankers Association, though refinance and purchase application activity was lower than a year ago.
Pending sales were up 0.4% week-over-week for the four weeks ending Aug. 9, according to Redfin, but were still down 1.6% compared to a year ago.