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Key developments:
- The balance of supply and demand has tipped, with an estimated 51.3% more sellers than buyers in July, nearing the highest imbalance of the year. This excess of listings is pushing inventory to its highest levels since the pandemic, creating a buyer‑friendly environment.
- Pending home sales showed only a modest 0.4% weekly gain in early August, but the broader trend is a 4% month‑over‑month decline in September, accompanied by a record‑high 14.5% contract‑cancellation rate, underscoring buyer hesitation.
- Mortgage rates remain elevated, staying above the 7% threshold and reaching 7.5% on 30‑year loans. The high cost of financing is prompting many sellers to cut prices; 21% reduced their asking price in the four weeks ending Sept. 20 – the highest seasonal rate on record.
Why it matters:
- Excess supply and price concessions give buyers more negotiating power, but the high rates still limit affordability, especially for first‑time purchasers.
- The slowdown in pending sales and rising cancellations signal that even with lower prices, many buyers are being priced out by financing costs.
- Builders and investors are watching the inventory overhang; continued price cuts could accelerate a prolonged correction in home values.
What to watch next:
- Federal Reserve and market signals on whether mortgage rates will retreat below 7% in the coming months.
- Updates from Redfin and Zillow on pending‑sale trends as the holiday season approaches.
- Potential policy moves aimed at easing affordability, such as adjustments to mortgage credit availability or targeted first‑time‑buyer incentives.
Overall, the housing market is transitioning into a buyer’s market, but sustained high mortgage rates may keep demand suppressed, making price reductions the primary lever for activity going forward. [[1, 2, 3, 4]]