Home prices across the U.S. faced the sharpest rise since November even with lackluster demand.
During the four weeks ending July 23, the typical home sold for about $382,000, a 2.6% increase from the same time a year ago, according to recent data from Redfin.
Areas that saw the biggest increases were Miami (11.9%), Milwaukee (9.3%), Cincinnati (8.9%) and Anaheim, California, (8.3%).
Redfin's Homebuyer Demand Index — a measure of requests for tours and other homebuying services from Redfin agents — fell 3% from a year ago. Meanwhile, mortgage-purchase applications were also down about 23%. Both factors underscore how demand for buying a home has waned as homeowners hang onto their relatively lower interest rates.
However, inventory has fallen even more than demand, "which is sending prices up," Redfin reported.
The total number of homes for sale is down 17% from a year ago, the biggest decline in over a year. New listings fell 22%, according to Redfin data.
Pending sales have also slipped, down 15%, in part because the lack of inventory is "tying potential homebuyers’ hands," Redfin reported.
However, it isn't all bad news for the housing market.
Federal Reserve Chairman Jerome Powell on Wednesday revealed that the central bank's staff economists no longer foresee a recession. In April, the minutes of the central bank’s March meeting had said that staff economists envisioned a "mild" recession later this year.
Powell also said Wednesday that a "soft landing" — in which inflation would fall back to the Fed’s 2% target, without causing a deep recession — is still possible.
"My base case is that we will be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses," the Fed chair said. "We do have a shot at a soft landing."
Redfin Economic Research Lead Chen Zhao said that if we avoid a recession then "Americans will hold onto their jobs, for the most part, and feel more confident about purchasing big-ticket items like a house."
Zhao noted that mortgage rates will stay elevated for at least the next few months, but they will "likely" start to come down before year's end. This will in turn "encourage some sellers and buyers to jump into the market," Zhao added.
The Associated Press contributed to this report.