Strong home sales mask impending slowdown for originators

July's home sale gains are a sign activity might have reached a plateau. 

Closed home sales surged 7% year-over-year in July, marking the strongest annual gain seen so far this year. Total closed sales reached 382,898 homes, according to Zillow's July Market report. 

"July was a strong month for existing home sales, but unfortunately it may represent the peak of what we can expect for the rest of the year," said Mischa Fisher, chief economist at Zillow. 

The other side of the coin is that newly pending listings fell 7.7% from June and grew just 0.3% year-over-year as rising mortgage rates prompts buyers to pause. Unless mortgage rates reverse, higher rates in August will likely push the typical mortgage payment above 2025 levels, erasing the short affordability advantage.

Homes took a median of 25 days to go pending, five days longer than in July 2025. Over 27.1% of active listings had a price cut in July, up from 25.7% in June, as sellers are forced to adapt to a smaller pool of active buyers. Slowing buyer pipelines are forcing sellers to adjust listing prices as rate pressures mounting across major metros take away seller leverage. 

Concessions are not limited to home purchasing either. Nearly 40% of rental listings offered concessions, up significantly from 36.0% a year ago. This points to strong new multi-family apartment business activity creating competition among property managers. 

"Unfortunately, the weak growth in newly pending sales in July and the worsening rate environment portend a weaker half of the year for sales growth, with flat to declining transaction volumes for the remainder of the year in some regions," said Mischa Fisher, chief economist at Zillow. 

Markets that saw massive post-pandemic surges are cooling down, with home prices declining year-over-year in Austin, by 4.5%; Dallas, 2.2%; Miami,0.2%; and Seattle, 1.5%. Metros like New York and Chicago continue to post robust home value appreciation due to tight inventory. 

Affordability remains a concern underneath it all, as starter homes start at $1 million in many U.S. cities. For loan officers, this means shifting spending and marketing towards places first-time buyers have more purchasing power. 

Daily mortgage rates climbed back toward the upper 6% range, effectively chilled pending contract activity heading into August. The monthly mortgage payment on a typical U.S. home is $1,888, assuming a 20% down payment and excluding taxes and insurance. That is 0.9% lower than last year, but still putting pressure on affordability.