According to Realtor.com Research, the housing market hit a significant turning point in August after months of relative strength. Mortgage rates climbed to their highest level of the year early in the month and stayed elevated throughout August, even surpassing where they sat a year prior for the first time since October 2025. Combined with brutal summer heat and the seasonal slowdown typical of August, the result was less activity overall. Both new listings and pending sales fell compared to last year, while price cuts ticked back up to match last August's levels after trailing behind for most of the spring.
The research shows that after eight consecutive months of growth, pending sales actually turned negative in August with a slight year-over-year decline. This marks an important shift, as pending sales had been one of the market's brighter spots through May when they peaked with strong gains. Meanwhile, home price declines continued their downward trend for the tenth consecutive month, though the pace of decline has slowed considerably from what we saw the previous month. About one in five listings now carries a price reduction, which puts us back where we were last year.
The data reveals some mixed signals about market health. On the positive side, sellers aren't abandoning the market in the way they did during the rough patch in 2025. Delistings are running significantly lower than last year, which suggests the market hasn't deteriorated into dysfunction where buyers and sellers are too far apart to do business. However, the negative movement in both price cuts and pending sales indicates that buyer demand is weakening as mortgage rates persist at higher levels.
Looking at the country regionally, the picture varies considerably. Inventory is growing in all four major regions for the first time in several months, with the Midwest seeing particularly strong increases. The Midwest's prices remained essentially flat year over year, while the other regions saw declines, with the Northeast experiencing the steepest drops. At the metro level, some markets like Austin, Tampa, and Memphis are seeing notable price pressures when adjusting for square footage, while others like Providence and Indianapolis are holding up better.
What I'm seeing locally in the Bay Area and East Bay tells me we're heading into a period of adjustment. San Jose is one of the few bright spots nationally with strong new listing growth, but San Francisco's inventory is down meaningfully, which could support prices there despite broader softening. In Fremont and across the East Bay, we're likely to experience what other markets are facing: fewer buyers moving at this price and rate level, which means sellers need to get realistic about pricing sooner rather than later. The good news is we're not seeing the kind of market breakdown we experienced in 2025, but the momentum is definitely shifting.
