The severe heat waves may have contributed to a slowdown in homebuyer activity despite lower monthly payments, better rates and increasing inventory.

Typical monthly housing payments dropped to $2,722 during the four weeks ending July 14, a $115 drop from April's all-time high payment according to a new report from Redfin. In addition, daily average mortgage rates dropped to their lowest level since February, giving buyers about $25,000 in additional purchasing power. For example, a homebuyer on a $3,000 monthly budget can afford a $450,000 home with a 6.8% mortgage, as of mid-July, up from $425,0000 at a 7.5% rate in April.

"Severe heat waves are making people feel pretty much locked in their houses," said Redfin premier agent Kristin Sanchez. "They don't want to come out to see homes because it's miserable outside; open houses haven't been getting much traffic."