New listings inch up, but homebuyer demand has dropped off
While inventory has continued to creep up in the final days of the month, less homebuyer competition is expected in the coming weeks as the summer winds down.
Key points:
- New listings reached a four-month high in late August, giving homebuyers more choices heading into the fall.
- But demand is down — due in part to seasonality and to persistently elevated mortgage rates, which remain around the highest levels of the year.
- Distressed property filings are starting to creep up, demonstrating that “financial pressures remain a factor for some homeowners,” according to ATTOM’s CEO. Still, foreclosure filings remain below pre-pandemic levels.
As the summer winds down, the next couple of weeks may provide a window of opportunity for homebuyers — but persistent affordability challenges remain a roadblock for many.
While Redfin has reported that new listings nationally are at the highest levels since April, providing buyers with more choices, late August through Labor Day weekend is generally considered an especially weak time for buyer competition as the new school year begins and summer vacation season wraps up.
Meanwhile, mortgage rates remain elevated and home prices continue to rise — ongoing barriers for many would-be buyers trying to make the numbers work.
Financial challenges aside, this might be an opportune time for buyers to explore what concessions sellers are willing to make, according to Chen Zhao, Redfin's head of economics research. "House hunters should consider homes that have been listed for several weeks; sellers of those homes may be willing to accept an offer under asking price, provide concessions like a mortgage-rate buydown or make repairs based on an inspection," Zhao said.
New listings rise, loan applications fall
New listings rose 0.4% from a week earlier during the four weeks ending Aug. 23, according to Redfin's Aug. 27 report. Overall inventory is up 1.6% year-over-year, while pending sales are down 3.1% compared to this time last year.
Mortgage applications have also fallen, with overall activity down 1% week-over-week as of Aug. 21 and purchase applications down 5% compared to a year ago — the latter driven by a 7% decrease in FHA applications, according to Joel Kan, VP and deputy chief economist at the Mortgage Bankers Association.
Mortgage rates rise again
Along with the seasonal slowdown in demand, activity in the housing market hasn't been helped by persistently elevated mortgage rates, which ticked up this week and remain near 12-month highs. The 30-year fixed-rate mortgage averaged 6.66% as of Aug. 27, according to Freddie Mac's weekly survey — up slightly from 6.65% last week.
The 15-year rate is meanwhile averaging 5.98%, well above a year ago when the average was 5.69%.
Mortgage rates could fluctuate later this week based on what Federal Reserve Chair Kevin Warsh says at his scheduled Aug. 28 address in Jackson Hole, Wyoming. But investors are largely expecting Warsh to strike a neutral tone, according to Hannah Jones, senior economist at Realtor.com.
"Mortgage rates have climbed for much of the year, driven largely by the Iran conflict's effect on oil prices, which has kept inflation expectations, and by extension mortgage rates, elevated," Jones said.
Foreclosure activity 'relatively low'
The number of foreclosure filings has trended upward in recent months but remains well below pre-pandemic levels, according to an Aug. 27 report by ATTOM. July foreclosure filings were up 1% from June and up 10% from a year ago, with nearly 40,000 filings recorded across the U.S. last month.
"The increase in foreclosure starts and completed foreclosures compared to last year shows that financial pressures remain a factor for some homeowners," said Rob Barber, CEO at ATTOM.
"However, the broader context is important," Barber added. "Foreclosure activity remains relatively low by historical standards. While annual increases have become more common, current volumes indicate that the market remains relatively resilient overall."