August Market Report: Late-Summer Buyer Windows

Late summer is bringing a mix of opportunity and uncertainty, depending on the market. Lower rates have opened a brief window for buyers with enough financial firepower, even as affordability challenges and uneven home-value trends linger.

Rates are better, at least for now

On the heels of weak jobs numbers, the 30-year fixed mortgage rate declined to 6.67 in early August. Mortgage applications jumped on the news, largely driven by refinance activity, but new purchase applications initially jumped only 1% above the previous week. 

“We’re hearing buyers say they want to wait for the Fed to cut interest rates in September,” says Zillow Home Loans Senior Regional Manager Jack Christie. “Agents can remind buyers that those anticipated Fed cuts are already baked into pricing. If you wait until September, and they don’t cut, you can expect rates to jump back up.”

Though the market is confident that September Fed cuts will happen — as of August 13, markets were pricing in a 100% chance that they would — they’re not guaranteed. Signs that tariffs may finally be leaking into prices are increasing — a factor that could limit the Fed’s flexibility. 

Tip: Remind buyers that any potential Fed rate cut is mostly already priced into today’s mortgage rates. 

Supply pulls back in some markets 

Inventory rose in 27 of the top 50 metros, led by Louisville (6.9%), Buffalo (5.2%), and Cincinnati (3.6%). But in markets like Boston, Hartford, San Jose, Phoenix, and San Francisco all saw negative MoM inventory change well over 5%. Buyer activity in these metros is still outpacing new listings. Affordability in these areas remains strained, so any seller pullback can quickly tighten supply.

Tip: To get a more comprehensive display of supply and demand in your market, check out Zillow’s Market Heat Index.

Top 50 markets: YoY home values rise in 25, fall in 25

Twenty-five major markets, mostly in the Midwest and Northeast, have seen YoY home value growth. Demand is high in affordable areas, but building restrictions have hampered new and higher-density projects. Sellers have few options to upsize into, and existing inventory is still below pre-pandemic averages in many metros. 

Home values have fallen YoY in 25 markets — most in the South or West — restoring pockets of affordability lost in the early pandemic run-up in prices. Buyers are gaining some leverage across the country, with more markets approaching balance, and sellers cutting prices at record rates (27.4% in July, another record high in Zillow data dating back to 2018). Buyers are making gains in the battle for negotiating power, but they’re still largely losing the war on affordability.

“Perhaps more than ever, whether it’s a good time to buy depends on where you live,” says Zillow Senior Economist Kara Ng. “In many areas, buyers are gaining leverage that most of them can’t use, because cost barriers are too high.”

Tip: Show clients the Buyability tool, which helps them check which homes are in their price range as they search Zillow.

See where your market ranks in YoY home value growth