diff --git a/tests/unit/sortable/sortable_methods.js b/tests/unit/sortable/sortable_methods.js
index f3fe240e701..9c0a86a359b 100644
--- a/tests/unit/sortable/sortable_methods.js
+++ b/tests/unit/sortable/sortable_methods.js
@@ -90,4 +90,39 @@ test( "disable", function() {
 	equal( chainable, element, "disable is chainable" );
 });
 
+test( "refresh() should update the positions of initially empty lists (see #7498)", function() {
+	expect( 1 );
+
+	var changeCount = 0,
+		element = $( "#qunit-fixture" ).html( "<ul></ul>" ).find( "ul" );
+
+	element
+		.css({
+			"float": "left",
+			width: "100px"
+		})
+		.sortable({
+			change: function() {
+				changeCount++;
+			}
+		})
+		.append( "<li>a</li><li>a</li>" )
+		.find( "li" )
+			.css({
+				"float": "left",
+				width: "50px",
+				height: "50px"
+			});
+
+	element.sortable( "refresh" );
+
+	// Switch the order of the two li elements
+	element.find( "li" ).eq( 0 ).simulate( "drag", {
+		dx: 55,
+		moves: 15
+	});
+
+	equal( changeCount, 1 );
+});
+
 })(jQuery);
diff --git a/ui/sortable.js b/ui/sortable.js
index 0207c86206d..913949c20c6 100644
--- a/ui/sortable.js
+++ b/ui/sortable.js
@@ -77,17 +77,12 @@ return $.widget("ui.sortable", $.ui.mouse, {
 	},
 
 	_create: function() {
-
-		var o = this.options;
 		this.containerCache = {};
 		this.element.addClass("ui-sortable");
 
 		//Get the items
 		this.refresh();
 
-		//Let's determine if the items are being displayed horizontally
-		this.floating = this.items.length ? o.axis === "x" || this._isFloating(this.items[0].item) : false;
-
 		//Let's determine the parent's offset
 		this.offset = this.element.offset();
 
@@ -731,6 +726,11 @@ return $.widget("ui.sortable", $.ui.mouse, {
 
 	refreshPositions: function(fast) {
 
+		// Determine whether items are being displayed horizontally
+		this.floating = this.items.length ?
+			this.options.axis === "x" || this._isFloating( this.items[ 0 ].item ) :
+			false;
+
 		//This has to be redone because due to the item being moved out/into the offsetParent, the offsetParent's position will change
 		if(this.offsetParent && this.helper) {
 			this.offset.parent = this._getParentOffset();