According to Redfin News, the national housing market hit a significant slowdown in July, with home sales dropping to levels not seen in nearly two years. The data showed that completed sales fell on a month-over-month basis, and more importantly, pending sales, which signal future transactions, also declined and reached their lowest point since December. This suggests that buyer interest is really cooling off across the country.
The main culprit behind this slowdown is straightforward: homes have become unaffordable for most people. Median sale prices hit record highs for July, and mortgage rates climbed to their highest point in a year. Beyond just the price tag, many buyers are also spooked by broader economic concerns about job security and inflation, making them hesitant to take on such a large financial commitment. Redfin's economics head noted that the combination of record-high prices, rising rates, and financial uncertainty has created a perfect storm keeping buyers on the sidelines.
What's particularly telling is that some buyers who did make offers ended up backing out, hitting the highest cancellation rate since 2023. This tells me that people are getting cold feet even after committing to a purchase. The market weakness is not distributed evenly across the country. Texas metros like San Antonio, Dallas, and Fort Worth are seeing the sharpest year-over-year declines in actual sales, while Seattle is experiencing the steepest drops in pending sales. In Seattle, tech industry layoffs at major employers have hit workers hard, making people nervous about overcommitting to home purchases in a market where median prices are nearly double the national average.
On the flip side, some markets are bucking the trend. San Francisco is actually seeing home sales rise, partly driven by wealthy buyers less concerned about prices and boosted by the artificial intelligence boom creating economic optimism in the Bay Area. West Palm Beach is also thriving, and Milwaukee is holding up reasonably well because homes there remain more affordable compared to national averages, and new listings are coming to market.
The inventory situation is tight overall. New listings hit their lowest level since October 2024, as homeowners are reluctant to list their properties when they'd have to give up historically low mortgage rates. Sellers are also watching buyer demand soften and deciding to wait it out. This means homes that do come on the market are sitting longer, preventing total inventory from plummeting even though fewer homes are being listed.
What I am seeing locally here in the Bay Area and broader East Bay is a tale of two markets. Our region is definitely outperforming the national trend, and that's largely because San Francisco and the surrounding area benefit from concentrated wealth and the tech sector momentum. For our buyers who can afford homes, this is actually a moment where they might have more negotiating power than they've had in years. For sellers, the message is clear: you need to be realistic on pricing and prepared to make concessions if you want to move your home. The national weakness is a reminder that even strong local markets can face headwinds, so proper positioning matters more than ever.
