Look, we're seeing some real headwinds in the housing market right now based on what Zillow is reporting. Home sales dropped slightly compared to last year in August, and they fell even more sharply from July. The main reason is pretty straightforward: mortgage rates are sitting above six and a half percent, which is the highest we've seen in a year. When rates climb like that, a lot of potential buyers just decide to wait it out rather than move forward with a purchase.
What's particularly telling is what's happening with pending sales, which is really the canary in the coal mine for where the market is headed. Those newly pending listings dropped almost three percent compared to a year ago, which suggests this slowdown we're experiencing isn't just a blip. It looks like we could be dealing with softer activity through the rest of the year.
On the pricing side, home values are still climbing, up about one and a third percent from a year ago nationally. But here's the thing that really matters for monthly budgets: the typical mortgage payment is now two percent higher than it was a year ago. And renters aren't getting any relief either. Rents have jumped two and a half percent year over year, and that growth is actually picking up speed. This puts potential buyers in a tough spot because neither option is getting cheaper.
The one piece of good news is that overall inventory has ticked up three percent from last year, and there are some homes available to choose from. However, new listings actually fell pretty sharply from July, and we're seeing more sellers having to cut prices. Right now about one in four listings has a price reduction, which tells you that sellers are adjusting their expectations to match what buyers are willing to pay.
What I'm seeing locally here in the Bay Area and Fremont is that these national trends are hitting close to home. When rates stay elevated like this and monthly payments get heavier, buyers tend to pause and reconsider their timing. The rental market is absorbing a lot of that demand that would normally flow into home purchases, and that's changing the dynamics of what we're dealing with in the East Bay. Until mortgage rates come down meaningfully, I expect we'll continue to see this softer market where sellers need to be realistic about pricing and timing.
