August Market Report: 3 Ways to Revive Cool Leads This Fall

The market has now endured more than a year of higher interest rates without a national price crash. Sales volume of existing homes in June was down nearly 19% from a year earlier. Stifled by mortgage rates at 21-year highs and inventory that’s slowly climbing from historic lows, competition has been especially relentless for entry-level homes.

Take Kansas City, where the average home of any type stayed on the market for a range of just three to four days during spring and early summer this year. (And for the record, every spring and early summer since 2020.) Elsewhere, the hottest pandemic markets are still cooling. Austin was the lone major market that saw home values drop from June to July, falling 0.5%.

Regardless of your market, sales volume is likely slowing and leads are getting scarcer. That means it’s time to think about fall strategies and how to thrive through colder months. Thankfully, today’s unusual macroeconomic climate offers some opportunities.

Remind buyers that fall means price cuts and less competition

Key stat: Nationally, the share of listings with a price cut rose from 17.2% in April to 21.8% in July.

“​​I’m pretty confident that the fall will be a good time for some people to buy,” says Zillow Senior Economist Jeff Tucker. “Buyers who’ve felt daunted or got outbid amid surprisingly stiff competition this spring can watch for good options in August and September. It’s really a sweet spot when they’ll face less competition and still see enough options to help them find a great fit.”

Nationally, homes are taking longer to go under contract — 12 days in July compared to 11 in June and 10 in April and May. While that’s half as long compared to 2019 figures, it’s a sign that seasonality may be slowly trending toward a normal pattern.

Newly pending sales volume also slowed along seasonal trend lines, and sales of existing homes are down about 15% year over year. The number of listings with a price cut ticked up slightly from June as well, right in line with pre-pandemic norms at about 22%.
“Many sellers don’t realize how much demand can wane from the second quarter to the third,” Tucker says. “Or they just didn’t have their ducks in a row to get the house shipshape for listing in the spring.” Both scenarios can present opportunities for buyers.

Takeaway: “Buyers looking for a deal should watch for listings with price cuts and listings that have been on the market for more than a full week,” Tucker says.

Explain that mortgage rates could stay stuck or even rise

Mortgage rates are often a buyer (and seller) objection this year, but rates don’t necessarily affect whether this fall is a good time to buy, according to Tucker.

“If this turns out to be the rate peak before a long decline, buyers can refinance in the near future, having benefited from buying when higher rates discouraged fiercer competition,” he says. “And if this turns out to be a plateau on the way to even higher rates, then they can be even happier to have locked in today’s percentages.”

Takeaway: If rates go up, buyers can be glad they bought now; if rates go down, they can refinance. Either way, fall buyers will see less competition for available homes.

Look for seller leads with high mortgage rates or major life changes

Key stat: Nearly a quarter of homeowners intend to sell in the next three years.

Finally, a July 2023 Zillow report offers a ray of light. Nearly a quarter of homeowners are considering selling in the next three years or have their home currently listed for sale. That’s up from 19% in Q1 and 15% a year ago. Among those, four in 10 said they’re considering selling in the next year.

Mortgage holders who reported rates higher than 5% are nearly twice as likely to plan to sell in the next three years as those with rates under 5%.

That last figure may not apply to many homeowners since, before last year, the average 30-year fixed rate hadn’t been above 5% since 2009. But it’s worth asking who in your sphere may be or may know of someone who refinanced — be it for a cash-out refinance, to consolidate debt, or any other reason — at a higher rate. The numbers from the report suggest that inventory levels dragged down by rate-locked homeowners might soon be on the rise.

Takeaway: Check in with your leads about major life events. A 2021 Zillow study found that nearly 80% of sellers said a life event influenced their decision to move. That’s double the 40% who said low mortgage interest rates influenced their decision. The number one life event cited was a change in household or family size.