Let's start with some really good news. For two months in a row now, we had over 300 pending transactions in our MLS - 306 for July and 305 for August.

That marks the second highest month of pending sales since October 2021 and we had 269 closing sales, which is the highest month since June 2022, outside of July.

So really, really strong buyer activity. What's causing that? Well, mortgage rates are certainly a contributing factor! We have the lowest mortgage interest rates since October 2024 at 6.49%.

It sounds like up to 95% of the market experts out there are anticipating that when the Fed concludes their meeting on September 17th, we are going to see the first official interest rate cut of 2025.

Now here is an important detail if you are a buyer. I would expect those rates to come down before the actual Fed announcement.

Last year I got a lot of calls, a lot of emails and questions: "Hey, the Fed just reduced their rate and the interest rate went up!" What you have to keep in mind is that mortgage interest rates, while they are influenced by Fed monetary policy, are not dictated by it. A lot of times what you'll see is rate movement ahead of an anticipated Fed announcement.

So if you're a buyer listen up! Go talk to your lender now. Get pre-qualified. Understand where your comfort level is with the current rate environment, so that your file is ready to go. Then, as soon as those rates do come down, you're in a position to strike not only with the houses that are available, but also you're not going to be jammed up trying to get a last minute prequalification. It also affords you an opportunity to go out there and shop your rate and fees with whatever lender you want.

We have Elevated Mortgage here in-house and have two loan officers here that would be happy to visit with you about where you're at and what the rates look like today. We even offer a last-look guarantee. So if you're shopping lenders, give them a shot.

Now let's talk about some other activity in the marketplace.

Pending sales for August were up 8.93% year-over-year, which is great news. This further accentuates the fact that buyers are coming out of the woodwork and coming into the marketplace. We're now at a 4.59 month supply of inventory. So, remember, a six-month supply is what most experts say is a balanced market.

So we are slightly under supply, although there's a lot of sellers out there saying that feels very different than what they're experiencing on the market. The reason for that is because of the active inventory, which is holding pretty steady. August 1st we had 1273 homes on the market. This is the second month in a row where our local inventory has actually softened. It's coming down. We started September 1st with 1249 homes on the market.

What we're seeing is that active inventory has been on the market 107 days. So that's still creeping up a little bit. However, on average, those active listings are priced just over 11% higher than the average sales price per square foot that exists in our marketplace. If you look back at our market update from last month, they were a little over 12%. So they keep coming down.

Looking at average days on market, the other thing that moved fairly drastically, Prescott went up by 23 days on market. So that is to say, of the 305 homes that were located in Prescott, they were on the market in August for 23 more days than they were in July.

We're still seeing some extended marketing times. Keep in mind that even though the inventory is coming down, this is a lot more inventory than our marketplace has seen in over a decade.

I read another statistic that 15% of every transaction on a national level in the month of July or August, I can't remember exactly which one right now, canceled their escrow. So transactions are canceling at a little higher rate. Buyers are taking a little bit more time to sift through the active inventory and they're a lot pickier than they have been because, let's face it, they've got more options to choose from.

From a valuation standpoint, Prescott remained flat. No appreciation, no depreciation. Last month saw a little uptick in Prescott Valley, a little over 2%.

One thing that I did notice is new construction pricing. If you read anything about real estate on a national level, one thing that you're going to stumble across is the conversation about new home communities and the big builders.

In Prescott last month, on average, new construction homes, which were built 2024 and newer, slid by about 7.75% and, in Prescott Valley, nearly 5%.

One stat that I uncovered was 37% of home builders across the US did a price cut last month and 66% are offering some sort of sales incentive, which is the highest share of those two sectors that we've seen in the post-Covid marketplace. So, don't underestimate your options, if you're a buyer, in new construction.

There are builders out there that are building amazing homes and many of them are offering either discounts off the price and/or incentives. I represent a local builder here and they're offering, in some cases, a 3-2-1 buy down, a 2-1 buy down, or a cash incentive. We actually put one of those homes under contract last weekend, actually after just being on the market for a couple of days.

So contact us if you have any questions whatsoever. We'll continue to keep you posted as to what we see, trending in the marketplace, and we'll talk to you next month. Thanks a lot.

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