- US housing supply rose a record 14% in July, according to data from Redfin.
- A record number of buyers backed out of purchase deals in July due to high costs and economic worries.
- Still, home prices are just 0.7% below a record high.
Homebuyers in the US are getting cold feet as prices remain elevated, backing out of deals at a record rate and pushing up the supply of available homes.
Active home listings rose a record 13.7% year over year in July, according to a report from Redfin.
That increase is mostly due to a record 59,000 canceled home-purchase agreements during the month, accounting for 15.8% of all homes under contract, as homebuyers face high costs and economic uncertainty.
Mortgage rates, meanwhile, are touching annual lows, but home prices remain just 0.7% shy of June's all-time high median price of $442,389, the report said.
"When rates finally dropped, buyers got excited and we saw more activity. But now that rates have fallen to the mid-6%-range, people have been waiting to see if they'll drop even more," Nicole Stewart, a Redfin real estate agent, said.
Stewart also cited buyers' concerns over the upcoming presidential election, though she says the result won't greatly impact the housing market.
Many homebuyers are likely waiting to see if mortgage rates will drop more, as investors are forecasting a 100% chance that the Federal Reserve will start cutting interest rates in September, according to the CME FedWatch tool.
But Redfin's senior economist Elijah de la Campa said waiting for lower rates isn't a guaranteed strategy.
"If you have the means to buy and have been thinking about doing so, now actually might not be a bad time," de la Campa said. "That's because mortgage rates have fallen enough to boost your purchasing power, but not enough to bring tons of buyers off of the sidelines and drive up competition."
The increase in active listings comes even as new home construction dropped 6.8% month-over-month in July, hitting its lowest level since 2020, according to data from the Commerce Department.