Signed contracts fall pass 8% year-over-year in September, but sellers wey get motivation dey around and dem fit choose to cut price instead of waiting until spring.
With neither homebuyers nor sellers showing much urgency to act, winter look like e dey arrive early for real estate market.
Homebuying activity don slow well well after 30-year mortgage rates spike, and di rates still dey around 7.5%, according to recent market data.
Pending sales for di past week come down 10.5% compared to a year ago, according to Compass Chief Economist Mike Simonsen, and e come down 8.4% year-over-year for September.
Inventory dey continue to build and e up 4.4% compared to same period a year ago, Simonsen find, but no be say new listings dey come online — homes just dey stay longer on market.
With di rapid rise in mortgage rates, “di housing market dey shift with notably fewer offers wey dem dey make right now,” Simonsen talk.
“Supply dey rise and we dey start to see shifts in di pricing data,” he add, pointing to uptick in price reductions but no meaningful drop in closed sales prices.
Zillow latest market report get similar findings.
E estimate say pending sales in September down 8.5% compared to a year earlier, while closed sales down 2.5% for di same period.
National Association of Realtors existing sales report for September suppose release on Oct. 13.
As home purchases down, demand don move go rental market.
Zillow estimate say U.S. rent prices rise 2.7% year-over-year in September, di biggest annual increase since April 2025.
“Di for-sale market slowdown na predictable given where mortgage rates currently stand, but di continued strength in di rental market dey more surprising.
Buyers on di margins dey find di monthly savings for renting too good to pass up, even if dia long-run goal still be to purchase home,” Mischa Fisher, chief economist at Zillow, talk for di housing report.
“We expect sales to remain lower than last year through di fourth quarter.
However, e no out of question say rates go decline as rapidly as dem rise, and dat go bring both buyers and sellers back to market.
For dis point in di calendar, di question na whether dem go sit out until next spring,” Fisher add.
Di affordability picture look quite different for prospective buyers and renters, according to Zillow report.
More than one-third (34.4%) of median-income household earnings go pay typical monthly mortgage in September, up from 33.7% a year earlier.
For renters in di same income bracket, typical rental rate chop just 26.3% of dia earnings, down small from 26.4% a year ago.
If 30-year mortgage rates remain for 7.5% range, potential buyers fit continue to bide dia time and rent.
Recent survey by John Burns Research and Consulting find say only 6% of U.S. homeowners and renters go accept rate for dat range.
Di “magic mortgage rate,” meaning one wey about half of those surveyed go find acceptable, dey between 5% and 5.49%, according to survey results.
While some sellers go also hold out for better conditions, those wey don tire of waiting fit willing to be flexible on price, according to Simonsen.
A year ago, mortgage rates bin around 6.3% and expected to decline in 2026, stoking hope for more active spring season.
While rates briefly drop below 6% in February, dem begin rise with onset of Iran war, and concerns about inflation and debt don continue push rates higher dis fall, making timeline for lower rates “highly uncertain,” according to NAR Chief Economist Lawrence Yun.
More sellers fit dey come to conclusion say waiting no worth it.
“For buyers willing to pay attention, finding motivated seller fit create bargaining power,” Simonsen talk.
Another trend wey fit dey on horizon na rise in short sales, according to Simonsen, because homeowners wey buy house in past four years with low down payment fit upside down on dia mortgage.
He expect overall distressed sales like foreclosures to remain low into next year, however, given strong job market and solid equity most homeowners get along with low locked-in mortgage rates.
