Shrinking home prices led to more sales in August

August's average accepted offer on a single-family property was one percentage point below the list price, which drove a month-to-month increase in home sales, according to Remax.

The real estate franchisor's National Housing Report looked at 51 metro areas and found August's close-to-list price ratio of 99% was down from 101% in July and 102% for August 2021.

Sales for the month were 5.3% higher than in July as the median price of $410,000 was 2.4% lower over the same period, rewarding "patient buyers," Nick Bailey, Remax president and CEO said in a press release. "Sales increased as buyers 'bought the dip' — which was not the trend many people were expecting."

However, compared with August 2021, home sales were down 20.1% and sales prices were 7% higher.

The inventory of homes for sale totaled 1.6 months in August, down from 1.7 in July but an increase compared to 1.2 for August 2021.

Meanwhile, the number of days a property remained on the market increased to an average of 28, four days longer than July and three days more than August 2021.

New listings were down 12.8% compared with July 2022 and 13.1% with August 2021 in the 51 markets observed.

"The late-summer burst of activity underscores the housing market's resiliency," Bailey said. "Despite the uptick in interest rates and concerns about the economy, demand remains strong."

Another sign of how competitive the housing market remains is the share of buyers that are making all-cash purchases. In July, that percentage neared the eight-year high level set in February, a separate Redfin report found.

Nearly one-third, 31.4%, bought their property entirely using cash in July, down from 31.5% in June and 31.6% in May, and close to February's 32.1%. In July 2021, 27.5% of purchases were all-cash.

All-cash transactions gained popularity last year because they allowed a potential buyer to stand-out from other offers that required the purchaser to apply for a mortgage, Redfin said. These deals also close quicker and do not have the risk of a buyer's mortgage application being rejected.

All-cash deals are popular not only with affluent buyers looking to — at least for now — avoid 30-year fixed rates that are above 6%, but also investors, Redfin said. Nearly three-quarters of investor purchases are made using cash.

The Redfin data also confirmed the increasing originations of government-guaranteed mortgage products from the Federal Housing Administration and the Department of Veterans Affairs. But the share of FHA mortgages is still well-below levels seen prior to the pandemic.

Conventional loans still predominate, with an 81.3% share of home sales during July, down from 81.9% a year earlier. This is also down from the record high of 83.8% set in April.

Meanwhile 12% of buyers took out an FHA loan, flat from a year earlier but up from the all-time low of 10.4% in the spring. A 6.8% share used a VA mortgage, up from 6.2% a year earlier and from the record low of 5.4% in spring 2021.

In the prepandemic year of 2019, FHA mortgages had 17% purchase share. Roughly 7% of purchase transactions used a VA mortgage, similar to July's share.