July Market Updates

Is it sizzle or slump for real estate as we reach the middle of the peak buying season? Insiders have been waiting with bated breath since at least February to see if this summer would finally bring the big “cool down” in the market following three years of fervent activity. The answer is that the market may finally be moving toward finding a balance.

As we look at July’s numbers, two interesting things are happening. Inventory is rising slightly to put a stop to the painful shortage that created a three-year-long seller’s market. However, a slight increase in inventory isn’t causing the pricing pendulum to swing the other way. This July actually saw an increase in the median list price. The verdict? Sellers aren’t yet ready to give up their advantage. However, buyers are finding it easier to get into homes if they’re willing to be patient about finding the right terms.

July 2023 Market Inventory

How is inventory looking this summer? There’s no doubt that inventory is much more robust this year compared to last year. In fact, Realtor.com data shows that national inventory of active listings increased by more than 30% this July compared to last year. This is actually a record-breaking growth rate. However, this take-your-pick trend for buyers may not last. We’re already seeing that newly listed homes declined by 2.8% on a year-over-year basis. While it’s unclear why some sellers are waiting, it may be that they are cautious about missing out on getting the highest price possible while inventory is swelling more than it has in the past.

Buyers have a reason to be excited about the slight increase in newly listed homes in July. This means that they could finally start seeing more options available at lower price points. However, buyers should be watching interest rates to see if increases cause sellers to hold on to their locked-in rates a little more tightly in the weeks ahead.

How Long Are Homes Staying on the Market in July?

Data from the National Association of REALTORS® (NAR) puts inventory of unsold existing homes at 1.08 million at the start of July. It works out to just over three months of inventory available for buyers to consider. While inventory crept up this summer compared to last summer, the trend doesn’t necessarily mean that buyers are getting more time to consider homes. Time on the market for July was just 35 days. That’s actually two days less than last year. It’s almost a full month less compared to pre-pandemic averages. What does this tell us? First, buyers are still mostly in a frenzied mindset when it comes to being able to get a home. The mile-long lines for open houses, contingency waivers, and bidding wars that have come to characterize the pandemic-era real estate market are still very much in place in many neighborhoods around the country. At this point, it’s hard to know how much of the rush to make offers is based on true market scarcity versus how much of it comes down to buyers now being hardwired to be aggressive about offers. The answer may become more apparent as we move into fall.

What Are Real Estate Prices Doing?

Buyers who assumed they’d be able to swoop in to pick up deals this summer after betting on the fact that prices simply couldn’t go higher are being disappointed in many markets. While the median home price for July won’t be out for a few more weeks, we know that June’s median existing-home sale price was $410,200. This is actually the second-highest price on record. The all-time high was hit when the median price reached $413,800 this time last year. While many people around the country will experience what feels like a repeat of last summer’s market, prices are declining more rapidly in some markets. Home prices are falling the most this summer in Austin, Boise, Myrtle Beach, Salt Lake City, Chicago, and Sacramento.

Looking at July 2023 Interest Rates for Homebuyers

With inflation slowing, there is some hope on the horizon for buyers who are frustrated by what can feel like punishing interest rates. Weekly averages posted for July 20 by Freddie Mac show that the interest rate on a 30-year loan is 6.78%. While that’s up 1.24 points from last year, it’s down 0.18 points from a week ago. For a 15-year mortgage, the rate is 6.06%. That’s down 0.24 points from a week prior.

Final Thoughts

In the months ahead, inventory levels are largely going to be determined by seller willingness to let go of low interest rates. That puts a lot of pressure on buyers to follow the Federal Reserve closely to look for signs of a rate increase if they are highly motivated to be in a home before the holiday season. While record prices are starting to ease in some places, this summer won’t go on record as being the start of anything resembling a buyer’s market.