High housing costs continued to sideline many prospective buyers in August
The US housing market’s shift toward buyers slowed in August as sellers stepped back and new listings dropped to a record low for the month, according to a new Zillow report.
Buyers had more negotiating power earlier this year, but that advantage faded as sellers reacted to slower sales and higher borrowing costs.
High housing costs kept many buyers out of the market in August, making it less competitive for those still looking. Zillow’s market heat index showed an unusual balance between buyers and sellers, with the least buyer competition seen in August since 2018. Because of this, home prices barely grew, with values staying flat compared to last year, one of the slowest growth rates since 2018.
Homes also took longer to sell, averaging 27 days to go under contract, about a week longer than last year. Despite the usual late-summer slowdown, competition picked up slightly as sellers pulled back. New listings dropped 7.3% from July, a sharper decline than normal for August and the lowest level since Zillow started tracking.
Most homeowners seemed happy to stay put, likely because of low mortgage rates and strong equity gains. Since early 2020, typical home values have jumped 46.5%. Zillow found that 37% of recent sellers moved for a new job, but that number could fall if the job market weakens. With fewer new listings, total inventory shrank 1.3% from its July high.
Window of opportunity for buyers may be closing
“Buyers who can afford a home and have been waiting for the right moment should look closely at what’s available now,” Zillow senior economist Kara Ng said. “Options are on the shelves, even if they’re not all fresh. Sidelined buyers should revisit their budget; mortgage rates are lower than recent years, and in some markets, sellers are more willing to deal. But don’t expect this window of opportunity to stay open indefinitely. Buyers’ leverage is easing as many sellers put their plans to list on hold.”
Kirk Todd, branch manager and senior loan originator at Choice Mortgage Group, shared similar advice in a recent interview with Mortgage Professional America. He said plenty of buyers are accustomed to the new rate environment and have decided to make their move now while they can.
“Even with just a little bit of a decline, I think a lot of people have just said, ‘Okay, we've been waiting around, and we can't wait any longer,’” he said. “‘We need a bigger house, or we need to downsize.’ We have a client right now that's trading in a 2.75% mortgage because they want to add on to their house. Hopefully, we'll see some rate declines in 2026 so we can refinance a 6.75% loan into a 5.5% loan.”
Regional divides and rising delistings
Buyers found the most leverage in the South, where pandemic-era hot spots like Miami, Tampa, Jacksonville, and Austin saw inventory rise above pre-pandemic levels, partly due to robust homebuilding. Seattle, once a seller’s market, shifted to favor buyers as inventory jumped 22% year-over-year.
On the other hand, the Northeast and San Francisco Bay Area remained strongholds for sellers. Buffalo, Hartford, San Francisco, San Jose, and Boston all saw fierce competition, with inventory still well below pre-pandemic averages.
The Zillow report came in the wake of new Realtor.com data, revealing that delistings in July jumped 57% year-over-year, outpacing the growth in active listings and marking a decisive turn in seller behavior. For the first time in years, more homes exited the market unsold than were added. The surge in delistings has been most pronounced in the South and West, where sellers have shown the least willingness to negotiate.
