You know, the July numbers look pretty good on the surface, but there's a story underneath that tells a different tale. According to Zillow Research, home sales climbed 7 percent compared to last year, which is the strongest showing we've seen in the first half of this year. That's encouraging to hear, but when you dig deeper, things get a little cloudier about what happens next.
Here's the thing that caught my attention: newly pending sales, which are really the forward-looking indicator of what's coming down the pipeline, only ticked up about 0.3 percent from a year ago. That's basically flat, and it suggests that July might be the high water mark for this year. The sales we saw close in July were contracts that got signed back in June, when mortgage rates were still friendlier and there was real momentum in the market.
What happened in July that's got me watching carefully is that mortgage rates jumped significantly, hitting their highest level in a year. That's the kind of thing that makes buyers pump the brakes pretty quick. Even though we'd been getting a small break on affordability with home values up modestly and monthly payments actually lower than they were a year ago, those rate increases are going to flip that advantage. Unless rates back off, we're probably looking at higher monthly payments than last July, which takes away that silver lining for buyers.
The way Zillow sees it, the second half of the year is shaping up to be slower than the first half. They're expecting that some regions could actually see flat or declining sales volume for the rest of the year as these rate pressures take hold.
What I'm seeing locally in the Bay Area and East Bay is that buyer caution is already setting in, and it's going to be important for sellers to understand that the summer momentum is likely fading. Buyers who were ready to move three months ago might be sitting tight now, waiting to see where rates stabilize. For folks looking to buy, this is a moment to be realistic about what you can afford as rates work against you.
