Pending Home Sales Creep Higher in July but Still Remain Close to Recent Record Lows

Redfin reported on Friday (8-25-23) that in July, pending home sales rose 0.7% month-over-month on a seasonally adjusted basis to the highest level since the start of 2023. Even with that modest increase, pending homes sales are still only 5.4% above their low point in March of this year. Year-over-year, pending homes sale were down 15.7%, the smallest annual decline since last summer.

Pending homes sales have stabilized as the shock of elevated mortgage rates has subsided, Redfin says. Pending homes sales dropped to 367,000 in March—the lowest level since the onset of the pandemic—and have been holding steady around that level ever since (387,000 in July).

Would-be buyers continue to be disheartened by high housing costs and a lack of homes for sale. The average 30-year fixed-rate mortgage was 6.84% in July, up from 6.71% in June and 5.41% in July 2022. As of Thursday, August 24th, the mortgage rate was at its highest level since 2001 at 7.23%. The median home sale price increased 1.7% year-over-year to $421,872 in July—the first annual increase since the start of the year. That is just 2.5% below the record high set of $432,476 in May 2022.

Adding additional background and her analysis to the report, Redfin Chief Economist Daryl Fairweather said:

“Home sales hit a bottom in 2022 and haven’t meaningfully budged since. Fading recession fears and the prospect of further home price increases have brought some house hunters off the sidelines, but for the most part, buyers remain hesitant to jump into the market because their buying power is so much lower than it was a year ago.”