Home buyers are holding their breath for rate cuts as existing home sales plunge to lowest since the pandemic

Buyers are back on the sidelines as they wait to see if mortgage rates fall further after , a Redfin report shows.

Existing home sales fell 1% in August from July, reaching a seasonally adjusted annual rate of about four million, the report finds. That’s the lowest level since the pandemic stalled home sales in May 2020, and discounting that month, it’s the lowest level on record since 2012.

Pending home sales also fell in August, reaching their lowest level since 2020, with a 1.9% decline from the month prior.

The report, released Wednesday, says buyers continue to wait for mortgage rates to come down further following their steady decline since the spring. The 30-year mortgage rate hit its lowest level in over a year last month.

The drop sparked a rush of refinance applications, soaring 34.5% to the highest level in over two years, but it hasn’t yet lured buyers back to market.

The report says buyers are likely waiting to see how the Federal Reserve’s expected interest rate cut impacts borrowing costs.

While interest rate cuts could help mortgage rates fall further, it’s unclear how much, since the housing market has already priced in an aggressive cutting cycle from the Fed, the report says.

Redfin agent Michael Cendejas said buyers also might just not know that mortgage rates have dropped so rapidly, and even if they have, they can be selective.

“There’s no sense of urgency. Buyers are selective right now, especially if they have a house already. They’re looking for the perfect home at the right price,” he said in a press release.

That means many homes have ended up sitting on the market, and a growing number of impatient sellers have cut prices.