Mortgage rates hit their highest level in nearly a year during the last week of July, pushing the cost of housing up and buyers out of the market, a new industry report found.

There were an estimated 51.3% more home sellers than buyers in the housing market last month, just short of December's peak of 51.8% and up from 47.9% in June, according to Redfin. A market where there are over 10% more sellers is considered a buyers' market, but that's only the case for people who can afford to buy.

"Buyers are dropping out faster than sellers, giving the buyers who remain more options and more negotiating power," said Asad Khan, a senior economist at Redfin, in a press release Thursday. "At the same time, uncertainty around whether the Fed will hike rates, and this summer's rising mortgage rates, are keeping many would-be buyers on the sidelines."

The number of homebuyers in the market, 966,752, fell 2.5% from the month before to its lowest level on record in July. Meanwhile, there were more than 1.4 million sellers in the market, down just 0.3% from June to its lowest level in a year, the report found.

The seller surplus was a result of sluggish demand as opposed to increased supply. The 30-year fixed-rate mortgage rose every week in July to 6.66%, while the median monthly housing payment jumped 1.7% year over year to $2,626, according to a separate Redfin report.

"That makes the stretch between now and Labor Day a potential sweet spot for people who need to move: Buyers have leverage, while motivated sellers may be willing to negotiate before the early-fall rush brings some buyers back to the market," Khan said. "This could be the best chance for buyers and sellers to meet in the middle."

Where are the strongest buyers' markets?

Nearly 80% of housing markets in the United States, 39 of the 49 metro areas Redfin analyzed, were buyers' markets in July. Miami led the nation with 154% more sellers than buyers, followed by Nashville, Tennessee, at 151%, Houston at 130%, San Antonio at 116% and Austin, Texas, at 112%, according to the report.

Miami, Nashville and the Texas cities have each seen a wave of new construction over the past few years, increasing supply and widening the gap.

Just six of the metro areas Redfin analyzed were considered sellers' markets, and the remaining four were deemed balanced markets. Nassau County, New York, posted the strongest sellers' market, with 36% fewer sellers than buyers. The other sellers' markets were Newark, New Jersey, at -21%; Providence, Rhode Island, at -17%; Milwaukee at -15%; New Brunswick, New Jersey, at -13%; and Montgomery County, Pennsylvania, at -13%, the report found.

The construction of new homes has been constrained for years in these Northeastern metro areas, while Milwaukee's housing market remained strong due to its affordability.

Home-sale prices rose an average of 4.2% year over year across the six sellers' markets last month, compared with a 2.3% increase in the 39 buyers' markets, according to Redfin.

Signs of life

While the housing market has been sluggish this summer, pending home sales ticked up 0.4% week over week during the four weeks ending Aug. 9 on a seasonally adjusted basis, a different Redfin report found. Purchase applications also rose 3% week over week.

Pending sales were still at their second-lowest level since March, and the latest spike may reflect normal week-to-week changes rather than a meaningful shift in momentum, but it was at least a potential sign of improvement. On an annual basis, pending sales were down 1.6%.

"Buyers should know that this isn't 2021 and 2022; the sellers' list price is a starting point for negotiations," said Sheryl Wingate, a Redfin Premier agent in the greater Seattle area, in a press release Thursday. "Some sellers are flexible, and their biggest priority is selling their home quickly: If a buyer loves a home, they should make an offer they're comfortable with, ask for the concessions they want, and open negotiations. More often than not, they can get a deal done."