With waning homebuyer demand—thanks to inflation and volatile mortgage rates—more sellers are holding back, causing a 12% drop in new listings from a year ago. 

A recent report by Redfin reviews leading indicators for buyer and seller behavior, and the factors contributing to that behavior.

With both buyers and sellers holding back, could this be the start of the cold war in real estate? It’s something Byron Lazine has been talking about for months:

New listings are down

Sellers have noticed the drop in the number of offers—or, at least, their agents have. During the four weeks ending August 7th, new listings went down 12% year-over-year, making this the steepest drop since June 2020. 


More homeowners are staying put, partly because buyer demand has cooled due to higher mortgage rates. Pending home sales are down 16% from the same time last year. 


Some homeowners have a lower mortgage rate locked in and, seeing the higher current rate, are hesitant to buy a new home, knowing they’ll be paying a significantly higher mortgage payment. 

Overall housing supply is up

While new listings are down, active listings are up—suggesting that buyers are holding back even more than sellers. 

The total number of homes for sale has gone up 4% compared to the same time last year. And while that means buyers who can still afford to shop for homes have more options to choose from, it also means sellers are facing stiffer competition. 


Leading indicators of homebuyer activity

For added context, Redfin detailed the top indicators of homebuyer activity: 

  • 30-year Mortgage Rates rose to 5.22% for the week ending August 11th—down from a 2022 high of 5.81% but up from 3.11% at the beginning of the year. 
  • Fannie Mae’s Home Purchase Sentiment Index shows a rapidly declining share of consumers who believe it’s a good time to sell. 
  • “Homes for Sale” Google Searches for the week ending August 6th were down 23% from August 2021 but up 12% from late May 2022. 
  • Redfin’s Seasonally-Adjusted Homebuyer Demand Index was down 9% year-over-year during the week ending August 7th but up 17% from the week of July 19th. 
  • Touring Activity–as of August 7th—was down 7% from the start of 2022, compared to a 15% increase at the same time last year. 
  • Mortgage Purchase Applications, during the week ending August 5th, were down 19% from a year earlier, while the seasonally adjusted index was down 1% week over week.

Top takeaways for real estate agents

Redfin’s Deputy Chief Economist Taylor Marr credits the recent cooling on both sides for bringing balance to the housing market. 

Buyers are backing off due to rising costs and sellers are holding back because they realize they won’t get the bidding wars their home would have attracted six months ago. In addition, many homeowners took advantage of refinancing or locking in 3% mortgage rates. 

We’re going to go into a Cold War of sorts in this real estate market. What does a Cold War mean? It means people are sitting on the sidelines….Sellers are sitting on the sidelines. Buyers are sitting on the sidelines because they finally had that first bit of reprieve… We’re normalizing a little bit, but in between here and a normal market, we do have a little bit of sideline sitting— what I’ve coined the Cold War of real estate.

Byron Lazine

If mortgage rates do continue their downward trend, we could see more buyers re-entering the market, leading to more intense competition and fewer days on the market for listings.  

As an agent, you should be sharing this data with your clients to educate them and help each one make the best decision—one they won’t regret months down the road.