Home sales slow as listings rise slightly

New home listings in the United States climbed to their highest level in four months by late August, giving buyers additional choices as the summer market cools. Demand has weakened due to seasonal patterns and mortgage rates that remain close to yearly peaks.

New listings rise, buyer demand falls

Nationally, new listings increased 0.4% during the week ending August 23, according to recent data. Total inventory rose 1.6% from the same period last year, while pending sales fell 3.1%. Mortgage applications also declined, with purchase activity dropping 5% compared to last year.

Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said FHA loan applications decreased 7% from a year ago, indicating reduced interest among first-time and lower-income buyers.

These changes may benefit those still searching. Chen Zhao, head of economics research at Redfin, advised buyers to consider properties that have stayed on the market longer. Sellers of those homes might be more willing to reduce prices, offer concessions like mortgage-rate buydowns, or cover repair costs after inspections.

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Mortgage rates remain high, foreclosures increase slightly

The average 30-year fixed mortgage rate reached 6.66% as of August 27, a small weekly increase, according to Freddie Mac. The 15-year rate rose to 5.98%, exceeding last year’s 5.69%.

Rates could fluctuate based on comments from Federal Reserve Chair Kevin Warsh at this week’s Jackson Hole economic symposium. Economists predict he will maintain a cautious tone, providing little immediate relief for borrowers.

Hannah Jones, senior economist at Realtor.com, linked much of the rate pressure to global tensions. The Iran conflict has sustained oil prices, which has kept inflation expectations high and mortgage rates steady.

Foreclosure filings also rose in July, climbing 1% from June and 10% from the previous year. Nearly 40,000 properties entered foreclosure last month—still below pre-pandemic levels but signaling financial strain for some homeowners.

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Rob Barber, ATTOM’s CEO, said the rise reflects ongoing financial challenges. He noted that while foreclosure activity remains historically low, it highlights struggles for certain borrowers.

A brief opportunity for buyers

The coming weeks may present a short-lived advantage for house hunters. From late August through Labor Day, competition typically weakens as families shift focus to back-to-school activities. Affordability remains difficult, with high prices and borrowing costs limiting purchasing power.

This pattern isn’t unusual. Past late-summer slowdowns have sometimes allowed buyers to secure better terms, though results varied. This year, mortgage rates have stayed nearly unchanged since spring, keeping many potential buyers out of the market.

For those able to proceed, patience could pay off. Homes that lingered unsold over the summer may see sellers adjust expectations. However, with rates unlikely to drop soon, the opportunity may not last.