The Housing Market Has More Listings and Lower Asking Prices. Buyers Still Aren’t Biting
Home sellers are lowering their asking prices, but lenders are making the monthly payment harder to swallow. Mortgage rates have crossed 7% again, and September’s rise in price cuts has coincided with fewer homes going under contract.
Asking prices move before sale prices
Price reductions reached 20.8% of listings in September, the highest share for that month since 2018. The national median asking price fell to ~$419K, marking an 11th consecutive month of annual declines.
The latest completed-sale measures paint a firmer picture. The FHFA and S&P Cotality Case-Shiller indexes showed July home prices rising 2.6% and 1.9%, respectively, from a year earlier.
Those indexes track repeat sales of the same properties, while listing data capture what sellers are asking today. July transactions therefore cannot show the full effect of September’s jump in borrowing costs, and an asking-price reduction does not necessarily mean a home ultimately sells for less.
The pressure also varies considerably by location. Salt Lake City had price cuts on 33.6% of listings, followed by Denver at 32.1%, while New York’s share was just 10.3%, according to Realtor.com’s September release.
Lower prices meet higher monthly payments
The average 30-year fixed mortgage rate reached 7.03%, its highest since the start of last year, according to Freddie Mac. Rates have risen roughly 0.4 percentage point since the end of August.
For someone borrowing $400K over 30 years, that increase adds nearly $100 to the monthly principal-and-interest payment. Buyers can negotiate a lower purchase price and still find that financing absorbs part of the savings.
The rise follows a climb in the 10-year Treasury yield, which influences mortgage pricing. It reached 5.256% on Tuesday, its highest level since 2002, adding pressure to a market already struggling with affordability.
That leaves sellers adjusting to what buyers can afford at current rates. Dallas agent Todd Luong of Re/Max DFW Associates says many properties will probably need one or two price reductions before selling.
Builders pay to keep buyers moving
The strain is already visible among housing stocks. The S&P 500 Homebuilding Index fell in September as Lennar ($LEN) and KB Home reported declining revenues, while Home Depot and Lowe’s also saw shares fall.
Builders have a way to ease buyers’ payments, but it comes at their own expense. Mortgage rate buydowns involve paying lenders upfront to reduce the interest rate charged to a purchaser, helping make the home more affordable without relying entirely on a lower sale price.
Those incentives become costlier as rates rise, adding to pressure from materials and labor costs. Keeping sales moving can therefore require builders to give up more of the profit on each home.
More listings need more signed contracts
Active inventory rose 5.4% from a year earlier to ~1.16M homes, leaving it 9.1% below typical pre-pandemic levels. Yet the stock of homes under contract fell 4.1%, its steepest annual decline since March 2025.
Realtor.com chief economist Danielle Hale says that combination shows affordability remains a central constraint despite greater choice and more price reductions. Sellers have largely stayed in the market: roughly 5.6% of listings were withdrawn in September, in line with last year.
The Economist argues that falling inflation-adjusted home prices could be a healthy correction, improving affordability and helping transactions resume. September’s figures show how difficult that adjustment becomes when borrowing costs move in the opposite direction.
Realtor.com economists are watching whether deeper or repeated price cuts produce more signed contracts, and whether frustrated sellers begin withdrawing listings. The next sign of improvement needs to come from buyers agreeing to purchases, not just sellers agreeing to discounts.
