Pending home sales rose by 1.6 percent year-over-year during the four weeks that ended on Aug. 27, marking two straight months of increases in pending sales, according to an Aug. 28 report from real estate brokerage Redfin.

Online platform Zillow reported that about 439,000 homes for sale in July were affordable to a household earning the median income—a 20-percent jump from 2024 and the highest total since August 2022.

Both metrics point to a robust buyer’s market. Redfin reported that the number of home tours is rising much faster this year than at the same time last year.

“Buyers are circling,” said Ali Mafi, a Redfin agent in San Francisco. “House hunters are feeling more confident about buying a home now that mortgage rates have started to decline. Some are making offers now, though others are sitting tight, betting that rates will fall further. I’m telling buyers to act now because it’s still a buyer’s market and most sellers are willing to negotiate. If rates do plummet, the market will get competitive.”

The 30-year fixed mortgage rate, supported by Freddie Mac, has gone down to 6.56 percent for the week that ended on Aug. 28. This is the lowest rate registered since October 2024.

The mortgage spread has dropped to its lowest level in more than three years, signifying better rates for home buyers and those looking to refinance.

Federal Reserve Bank Chairman Jerome Powell has expressed optimism for an upcoming interest rate cut in the September Federal Open Market Committee meeting.

If mortgage rates follow Fed rates and drop, there could be renewed enthusiasm in the housing market. However, waiting for this scenario could prove disadvantageous for buyers.

When demand increases, the supply naturally tightens, which may cause home prices to go up again.

New listings are up by 1.9 percent year-over-year, according to Redfin. As of Aug. 24, the median sale price for a listed or sold home in the United States was $395,500, and the median monthly mortgage payment was $2,616. There were 4.3 months of supply and 25.3 percent of homes sold above the list price.

Affordable Listings Versus Affordability

The jump in affordable listings is directly linked to higher inventory, according to Zillow, with more homes for sale in July than in any month since November 2019.

However, home prices are still on the expensive end.

Despite the increase in numbers, only 31.7 percent of listings in July were affordable to a median-income household, according to the online marketplace. This is far fewer than the 53.7 percent in July 2020.

According to a Zillow research report, the typical monthly mortgage cost is $1,000 per month higher than before the COVID-19 pandemic.

The high prices are keeping first-time buyers from signing purchase contracts.

The inclination to rent rather than own has been increasing, even in market segments where Americans have traditionally opted for home ownership.

According to a June report from housing data company Points2Home, renters are a majority in 203 of 1,500 U.S. suburbs with a population higher than 10,000. People are leasing far more than before.

Between 2018 and 2023, 15 suburbs switched from owner-majority to renter-majority.

“In terms of net numbers, it’s Frisco, [Texas,] that leads the way, with more than 10,000 renter households added since 2018. McKinney, [Texas]; Woodbridge, [Virginia]; and Grand Prairie, [Texas,] follow suit with more than 5,000 new renter households,” Points2Home stated.

Based on an Aug. 27 Redfin report, there are currently 36.3 percent more sellers in the market than home buyers. Anything more than 10 percent indicates a buyer’s market, according to the brokerage.

As sellers haven’t gotten the response they expected, many have started to pull back. About 14,000 home sellers have taken their listings off the market over the past two months.

“Homebuyers are spooked by high home prices, high mortgage rates and economic uncertainty, and now sellers are spooked because buyers are spooked,” said Asad Khan, an economist at Redfin. “Some sellers are delisting their homes or choosing not to list at all after seeing other houses sit on the market for weeks or months, only to fetch less than the asking price.”