The number of existing home sales rose by 2% to a total of 1.2 million in July. This represents a slight increase in buying activity.
The growth in home prices slowed down to 0.2% this month despite the fact that inventory levels were at their highest since May 2020.
Redfin CEO Glenn Kelman said that while affordability is still a problem, the housing market has begun to show signs of improvement. Lower mortgage rates and softer prices are providing some relief for buyers.
Home buyers are being pushed back by mortgage relief
Redfin’s chief executive Glenn Kelman stated in a CNBC Interview this week that even small declines in interest rates have a significant impact.
The average home buyer can now save around $20,000. This is equivalent to $200 per month in mortgage payments.
The financial breathing space encourages more buyers to return to the market. Kelman believes that this momentum will continue to grow over the next six-nine months.
Although affordability is still a problem, the slower growth of prices and reduced monthly costs are creating an environment that’s more favorable.
Redfin reported a 35 percent increase in written offers, which suggests that buyer confidence has returned, even though it is still at historically low levels.
The market is stabilizing as inventory trends stabilize.
According to Glenn Kelman CEO, there was a buildup in inventory on the housing market over the summer. Homes took longer to sell, averaging six weeks compared with five weeks the previous year.
The price drop was a result of this shift, especially in the overheated Sun Belt market like Texas and Florida. Sellers are pulling back now amid economic uncertainty. This has slowed inventory growth down to the lowest rate in over 17 months.
Kelman says that the landscape is “pretty balanced,” and neither sellers nor buyers are dominating.
The affordability gap is still wide but the inventory dynamics and price stability are helping create a market that’s more predictable for the buyers.
Buyer behaviour is influenced by regional disparities
Kelman noted in ” money Movers” that the uneven housing recovery is largely due to geography.
Home prices in Sun Belt cities like Dallas, Orlando and Tampa have been declining, but not as much as they are in Pittsburgh, Milwaukee and Cleveland.
Home insurance rates in Florida are so high that they can sometimes exceed mortgage payments, and this is causing buyers to hesitate.
Kelman says that costs of home ownership are now influenced by three variables: the mortgage rate, house prices and premiums for insurance.
Buyers are more careful as climate-related risk increases insurance prices, especially in areas prone to disasters.
The regional differences suggest that the recovery is likely to be uneven, as affordability and risks will determine local market trajectory.
While the housing market has shown early signs of improvement, a full recovery depends on sustained rates relief, stable inventories, and regional affordability. The housing market is showing signs of recovery, but the full revival depends on sustained rate relief, stable inventory and regional affordability.
The post: How soon will the housing market rebound? Redfin’s CEO may change his opinion as the story unfolds.
