This year's 'offseason' could be much busier for the housing market as buyer competition heats up, Zillow says

• Late summer is typically the start of the housing market's "offseason," marked low buying activity.
• However, this year, the market may see an unusually high level of activity amid lower mortgage rates.
• Buyers may encounter more competition this season compared to prior years.

The late summer and early fall are typically part of the housing market's "offseason," marked by low buying and selling activity.

But this year, the season could see an unusually high amount of activity as buyers look to lock in lower mortgage rates, a new Zillow report finds.

"Lower rates could stall or slow the cooldown in housing market activity that typically takes place this time of year, because right now buyers are more likely to be motivated by lower rates than sellers are," the report says.

The report, released Thursday, says mortgage rates have become "affordable" again, with monthly payments on a typical home falling over $100 since peaking in May, and are now down to under a third of median household income.

Lower mortgage rates could help more buyers qualify and enter the market.

"Late summer may be an opportunity for buyers who have been waiting in the wings for a monthly mortgage payment they can qualify for," Zillow chief economist Skylar Olsen said in a press release.

Buyers may also be enticed by a slight dip in prices that's been taking place as more sellers list their homes.

The report says spring is typically the "prime time" for sellers to make new listings with the aim to move in time for the next school year and fall holidays.

But the prime time for buyers seems to be coming later this year as more sellers cut prices after growing impatient from seeing their homes sit on the market for so long.

Since March, the portion of Zillow listings with a price cut rose every month up until August, when that portion fell slightly to just under 26% of homes on the market.

That's still a high proportion, and points to a different trajectory than normal, the report says.

"The Zillow market heat index shifted from being in favor of sellers into neutral territory in July. For the past two years, sellers held their edge nationally until October," the report says.

Those price cuts could lead summer's buying activity to extend into the fall as buyers look for lower prices amid record-high home prices. Prices in June rose 5.4% year-over-year to reach a record high , according to the S&P CoreLogic Case-Shiller index.

Yet, even with potentially lower prices and mortgage rates, there's a chance buyers remain on the sidelines while they wait to see if costs fall even more, and for more clarity on newly implemented agent negotiation rules .

An influx of buying activity could drive up competition, ultimately leading to higher prices for buyers.

"Affordability has improved substantially for home buyers, and competition among them could extend into the fall instead of fading away as is typical at this time of year," Zillow said.