In July, median home prices declined, marking a rare seasonal drop during a month that is usually a peak time for home sales.
According to a recent report from Realtor.com®, the national median list price fell from $445,000 in June to $439,950 in July.
This decrease is largely due to a slower summer housing market, as both buyers and sellers wait for more favorable economic conditions. “Mortgage rates dropped in July to their lowest level since March, driven by expectations that the Federal Reserve might cut rates soon,” notes Ralph McLaughlin, senior economist at Realtor.com®. “Some buyers might be waiting for even lower rates before making a move.”
This cautious approach from buyers has led to the slowest pace of home sales since 2020. Consequently, price reductions occurred on 18.9% of listings in July, an increase from 15.5% a year ago. “Sellers are adjusting their expectations and becoming more patient,” McLaughlin adds. This is the highest proportion of listings with price cuts since 2022, offering potential benefits for buyers.
Increase in Homes for Sale
Despite many buyers staying on the sidelines, those who did search for homes in July had more options compared to the previous year. The total number of homes for sale rose by 36.6% year-over-year, marking the ninth consecutive month of increased inventory.
“This rise in listings reflects a normalization in the housing market and indicates that the market is stabilizing,” McLaughlin says.
Inventory increases were seen across all U.S. regions, with the South leading at 47.6%, followed by the West at 35.4%, the Midwest at 22.7%, and the Northeast at 14.7%. Cities with significant increases in available homes include Tampa, FL (94.9%), Orlando, FL (78.7%), and San Diego (77.7%).
The surge in inventory can be attributed to recent changes in mortgage rates. “The drop in mortgage rates in July likely accelerated the growth in new listings,” McLaughlin adds. Newly listed homes were up by 3.6% compared to the previous year, reflecting increased seller activity.
For those seeking the most recent listings, the West saw a 7.3% increase in new homes compared to last July. The Northeast and Midwest experienced increases of 3% and 0.9%, respectively, while the South saw a slight decrease of 0.5%.
Metros with the largest rise in new listings include Seattle (37.3%), San Jose, CA (30.8%), and Columbus, OH (17.4%).
The Price Per Square Foot Paradox
Even though the national median list price has decreased, it remains relatively stable compared to last year’s $440,000. “When accounting for shifts in inventory towards smaller homes, the typical asking price has actually increased compared to last year,” McLaughlin explains.
The median price per square foot has continued to rise, increasing by 3.1% in July compared to the previous year. In the 50 largest metros, this figure has surged between 24.1% and 81.9% since July 2019. This trend suggests a growing inventory of smaller, more affordable homes.
In July, the number of homes priced between $200,000 and $350,000 increased by 47.3% year-over-year, surpassing growth in other price ranges.
Homes Still Taking Longer to Sell
In July, the average time a home spent on the market was 50 days, which is five days longer than both the previous year and the previous month. “July marks the fourth consecutive month where homes have lingered on the market longer compared to last year, due to rising inventory and slower sales,” McLaughlin says.
However, this trend might shift soon. “We expect selling activity to continue to normalize as mortgage rates decrease over the next year. There might be an unusual uptick in activity in September if the Federal Reserve decides to cut rates,” McLaughlin predicts.
