Buyers may flood market this fall. Here's why

The housing market could see a bump this fall akin to the traditional spring homebuying season. 

The steady mortgage rate decline and an atypical summer for home price growth could bring buyers off the sidelines, property analytics firm Cotality suggested in a recent report. Rates today are at their lowest point since last September, when a Federal Reserve rate cut unlocked a refinance "boomlet".

While some reports indicated a healthy start to this year's spring homebuying season, some figures showed purchase activity falling in April and mortgage rates ended the spring closer to 7%.

Annual home price growth fell 1.4% in July and was down 0.2% from June, according to Cotality's Home Price Index. That compares to a 2.7% inflation rate in the latest Consumer Price Index, a figure which combined with a weak jobs report has spurred wider hopes of another Fed cut. 

The only other July months in recent history in which the market saw an annual home price decline was in 2022, when rates shot up from historic lows, and between 2006 to 2008 at the precipice of the Great Financial Crisis. Before the pandemic, home prices averaged 0.4% growth in July from 2015 to 2019, Cotality reported.

The median sales price for a single-family home in July was $405,000, and the firm suggested buyers need at least $90,000 in income to afford those properties. Cotality noted for-sale inventory is still growing; a Zillow analysis this summer reported over 1.36 million listings nationwide. 

Which housing markets are hot, and which markets are cooling off?

Half of the nation's largest markets are still reporting price increases, and the top-five hottest metros by Cotality's calculations are all in Florida. Conversely, four of the top-10 coolest markets are also in Florida, with some smaller cities reporting almost 10% year-over-year home price declines. 

Home buyers, like those during the pandemic era, are still chasing affordability in Midwest metros and lesser-populated areas. Chicago, Indianapolis and Cleveland are experiencing home price increases. West Virginia and South Dakota, bastions of affordability, saw annual home price rises this summer of 5.7% and 6.2%, respectively. 

Investors are still stepping into the gap left by declining owner-occupied transactions. Cotality reports the buyers accounting for a third of purchases nationwide, and they remain bullish despite larger economic concerns.