Pending Sales Dip as Buyers Play the Waiting Game

A recent Redfin report revealed that existing-home sales fell roughly 1% month-over-month in September and an estimated 3.1% year-over-year in August—to a seasonally adjusted annual rate of 4,042,369. 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.

With the exception of April 2020, pending sales—a more recent indicator of housing market activity that takes into account both newly built and existing homes—fell to the lowest point ever recorded. Seasonally adjusted, they decreased 1.9% month-over-month and 2.4% year over year in August.

Since the spring, mortgage rates have been falling, and they reached their lowest point in more than a year in August. The cost of housing payments has decreased from a year ago. However, consumers have been hesitant to reply. That’s probably partly due to the continued high cost of real estate. In August, the August median sale price increased by 3% year-over-year to $433,101. Even though that was the least amount of a rise in nearly a year, prices were still just 2.1% below their all-time high of $442,344 in June. Buyers must provide greater down payments due to rising housing costs.

Agents Weigh In On Rates, How Buyers Remain Selective

According to Redfin agents, some prospective house hunters are delaying their purchase in the hopes that interest rates will drop even more, while others are holding off because they don’t understand the new National Association of Realtors (NAR) regulations or are waiting to see how the presidential election plays out.

Some prospective homebuyers, according to Sacramento, California-based Redfin Premier real estate agent Michael Cendejas, may not be aware that mortgage rates are falling. He claimed that although many people had heard that rates will drop in September, they hadn’t been keeping an eye out for drops in rates prior to this month.

September has brought renewed interest from buyers, according to Cendejas, but many are still waiting for rates in the 5% level before making an offer.

“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,” Cendejas 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.”

For the first time in three years, the average interest rate on a 30-year mortgage decreased to 6.5% in August from 7.07% the previous year. The rate decrease from one month prior was 0.35 percentage points, marking the biggest monthly decline since the end of 2023. Although they have since decreased even more—to 6.2% in the week ending September 12—they have nevertheless risen above the pandemic’s all-time low.

The Federal Reserve is anticipated to lower interest rates by 25 to 50 basis points continuing until 2025, marking the first rate reduction in four years. Mortgage rates might decrease in response, but it’s uncertain by how much as markets have already factored in a rate reduction at a very rapid pace.

August 2024 Housing Market Highlights:

Note: Data is subject to revision

Positive Indications for Buyers: An Increase in New Listings and a Decline in Homes Sold Above Asking Price

Aside from decreasing mortgage rates, there are a few more positive news items for prospective homeowners. The number of housing possibilities is increasing, resulting in increased choice. In August, new listings increased 2.1% from the previous year and 1.6% month-over-month to reach the greatest seasonally-adjusted level in over two years.

Furthermore, it is rare for residences to sell for more than their list price. August saw the lowest percentage of any August since 2019 when less than one-third of the properties that sold (30.2%) sold for more than their asking price. This is down from 36.2% a year earlier.

This August had the lowest amount of house sales since 2019, with the average home that was taken off the market selling for 99.3% of its list price—a decrease from 99.9% the previous year.

Metro-Level Highlights: August 2024

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, Texas (-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, CA (4%), and Newark, NJ (3.3%).
• They fell most in West Palm Beach, FL (-17.1%), Miami (-13.6%) and Fort Worth, Texas (-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, NJ (-10.6%).

Active listings: 

• Active listings rose most in Tampa, FL (50.1%), Fort Lauderdale, FL (46.4%), and San Diego (41.9%).
• They fell most in New York (-5.4%), Newark, NJ (-4.4%) and Chicago (-3.8%).

Sold above list price: 

• In Newark, NJ, some 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, NY (56.5%).
• The shares were lowest in West Palm Beach, FL (7%), Austin, Texas (10.8%) and Fort Lauderdale, FL (11.6%).

To read the full report, including more data, charts, and methodology, click here.