Key facts
- Mortgage rates have surpassed 7%, posing an affordability challenge for the US housing market.
- The relationship between new listings and new pending sales is a key indicator of buyer activity.
- Nationally, there were approximately 96 new pending sales for every 100 new listings between July 17 and Aug. 21.
- In Seattle, there were about 81 pending sales per 100 new listings during the same six-week period, down from 96 last year.
- In Louisville, there were about 85 pending sales per 100 new listings, down from 111 last year.
- Minneapolis-St. Paul saw about 105 pending sales per 100 new listings, down from 117 last year.
Mortgage rates have surpassed 7% this week, presenting a new affordability hurdle for the US housing market, which is already contending with fluctuating buyer demand. The key question for market watchers is how buyers will react to this sustained period of higher rates, a response that may take time to manifest in official housing data.
Direct year-over-year comparisons for the week ending September 11 are distorted due to the Labor Day holiday falling on September 7 this year, compared to September 1 last year. Therefore, analysts are focusing on the relationship between new listings and new pending sales as an early indicator of changing buyer behavior.
Nationally, the balance between new listings and pending sales has shifted only slightly. Between July 17 and August 21, there were approximately 96 new pending sales for every 100 new listings, a marginal decrease from 98 in the same period last year. During this six-week window, new listings increased by 2.2% year-over-year, while new pending sales remained nearly flat, decreasing by 0.3%.
However, some local markets exhibited a more significant imbalance entering this latest rate increase. In Seattle, Washington, there were about 81 pending sales for every 100 new listings during the summer period, down from 96 last year. This was accompanied by a 7.2% year-over-year increase in new listings and a 9.3% decrease in new pendings. Active single-family inventory in Seattle rose from 7,927 homes on July 17 to 8,510 by August 28, and the median days on market increased from 42 to 56.
The Louisville, Kentucky, metro area showed an even wider shift, with approximately 85 pending sales per 100 new listings, down from 111 last year. New listings saw a slight increase, while new pending volume dropped by over 21%. Active inventory in Louisville grew from 3,490 homes on July 17 to 3,760 by August 28, with the median list price remaining stable between $325,000 and $330,000.
Minneapolis-St. Paul, Minnesota, presented a different scenario, with about 105 pending sales for every 100 new listings this summer, down from 117 last year. Despite this year-over-year decline, the weekly ratio generally remained at or above 100, indicating that buyer activity was still keeping pace with incoming supply. This contrasts with markets where the ratio consistently hovers between 80 and 90 pending sales per 100 new listings.
Looking ahead, there is insufficient post-Labor Day data to definitively link the recent move above 7% mortgage rates to changes in buyer activity. The national trend between new listings and pending sales had already softened prior to rates crossing this threshold. Future clean weekly readings will be crucial to determine if buyer activity is losing further ground relative to supply. A consistent widening of the gap between new listings and pending sales would signal further demand weakness, while holding near the summer level of 96 pending sales per 100 new listings nationally would also be an important signal.