The Blubber

US homebuyers are increasingly backing out of deals as elevated prices continue, causing the supply of available homes to rise. In July, active home listings saw a record 13.7% year-over-year increase, according to a report from Redfin.

This spike is largely attributed to a record-breaking 59,000 canceled home-purchase agreements, representing 15.8% of all homes under contract. Many buyers are facing high costs and economic uncertainty, leading to hesitation in following through with deals.

While mortgage rates are nearing yearly lows, home prices remain just 0.7% below June's all-time high median price of $442,389, the report stated.

"When rates initially dropped, buyers got excited, and activity picked up. But now, with rates hovering in the mid-6% range, people are waiting to see if they’ll decline further," said Nicole Stewart, a Redfin real estate agent.

Stewart also mentioned that some buyers are concerned about the upcoming presidential election, though she believes the result won’t significantly affect the housing market.

Many potential buyers appear to be holding off, hoping for further drops in mortgage rates. Investors are predicting a 100% chance that the Federal Reserve will begin cutting interest rates in September, according to the CME FedWatch tool.

However, Redfin senior economist Elijah de la Campa warns that waiting for lower rates isn't a guaranteed approach. "If you’re able to buy now, it might be a good time," de la Campa advised. "Mortgage rates have fallen enough to increase your purchasing power but not so much that the market is flooded with buyers."

This rise in active listings comes despite a 6.8% month-over-month decline in new home construction in July, marking the lowest level since 2020.