Sluggish Summer May Turn into a Busy Fall for Real Estate

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After a sluggish summer homebuying season, real estate professionals are optimistic about a potential revival in the fall, driven by lower mortgage rates and a surge in housing inventory. According to the National Association of REALTORS® (NAR), existing-home sales dipped by 2.5% in August compared to July, and by 4.2% year-over-year. Despite these numbers, experts believe the market could see an uptick in the coming months as the environment becomes more favorable for buyers.

NAR Chief Economist Lawrence Yun points to the recent drop in mortgage rates and the increasing availability of homes as key factors that could shift the market. "The combination of lower borrowing costs and more inventory will create the right conditions for sales to rise," Yun notes. Total housing inventory rose by 23% year-over-year, reaching 1.35 million homes in August. This equates to a 4.2-month supply, giving buyers more options and potentially more negotiating power.

Still, high home prices continue to challenge buyers. In August, the median home price rose to $416,700, a 3.1% increase from last year, with the Northeast seeing the largest surge at 7.7%. Despite elevated prices, Yun highlights that falling mortgage rates—down to 6.2% in mid-September from 7.18% a year ago—are improving affordability. Lower rates could save buyers around $50,000 on a $2,000 monthly mortgage payment, possibly drawing sidelined buyers back into the market.

Fewer First-Time Buyers, Rising Investor Activity

The high prices are particularly tough on first-time homebuyers, who made up only 26% of sales in August, matching an all-time low. Meanwhile, cash buyers, often investors and second-home purchasers, remained a strong presence, comprising 26% of transactions.

Regional Breakdown

• Northeast: Sales dropped 2% from July, remaining flat year-over-year, while the median price surged to $503,200 (up 7.7%).
• Midwest: Sales were stable compared to July but down 5.2% year-over-year, with a median price of $315,400 (up 3.8%).
• South: Sales decreased by 3.9% month-over-month and 6% year-over-year, with a median price of $367,000 (up 1.6%).
• West: Sales fell by 2.7% month-over-month and 1.4% year-over-year, with a median price of $622,500 (up 2.2%).

As the fall season approaches, real estate professionals are hopeful that these market conditions will encourage more buyers to re-enter the market, helping to reverse the summer's sluggish trends.