US Housing Supply Surges as Buyers Back Out of Deals
In a surprising turn of events, the US housing supply experienced a record-breaking 14% increase in July, according to data released by Redfin. This surge comes as a record number of buyers withdrew from purchase agreements, citing high costs and economic concerns.
Despite the influx of available homes, prices remain near peak levels, just 0.7% below the all-time high. The unprecedented rise in active home listings, up 13.7% year-over-year, is largely attributed to the cancellation of 59,000 home-purchase agreements. These cancellations accounted for 15.8% of all homes under contract, reflecting growing unease among potential buyers faced with steep costs and economic uncertainty.
While mortgage rates have touched annual lows, home prices continue to hover near record highs. The median price in July stood just shy of June’s peak of $442,389. Nicole Stewart, a Redfin real estate agent, noted increased buyer activity when rates dropped but observed that many are adopting a wait-and-see approach, hoping for further rate decreases.
The upcoming presidential election has added another layer of complexity to the housing market, with buyers expressing concerns about potential impacts. However, Stewart believes the election outcome is unlikely to significantly affect the market. Meanwhile, investors are forecasting a 100% chance that the Federal Reserve will begin cutting interest rates in September.
Amidst these developments, Redfin’s senior economist Elijah de la Campa suggests that current conditions might present a good opportunity for buyers. Lower mortgage rates have increased purchasing power without driving up competition, creating a potentially favorable market for those ready to make a move.
In related news, new home construction saw a 6.8% month-over-month decline in July, reaching its lowest level since 2020, according to the Commerce Department. This drop in construction activity adds another dimension to the complex landscape of the US housing market.
As the market continues to evolve, potential buyers and sellers alike are closely monitoring these trends, weighing their options in an increasingly unpredictable economic environment.
