Home sellers are cutting prices at a record September pace and listings are climbing, but higher mortgage rates are still keeping buyers off the market.
Fox Business reported that Realtor.com’s latest monthly housing report showed 20.8% of active listings carried a price reduction in September, the highest share for that month on record, and up 0.9 percentage points from a year earlier.
Active inventory rose 5.4% from a year ago to more than 1.161 million homes. That narrowed the gap with typical pre-pandemic inventory levels to 9.1%, the first time the shortfall has dropped below 10% in the current recovery. Homes under contract still fell 4.1% year over year.
Jake Krimmel, senior economist at Realtor.com, put the blame on borrowing costs that jumped at the wrong time of year.
"Recent moves in mortgage rates weighed on the housing market in September."
Krimmel said rates climbed nearly 40 basis points, each basis point is one-hundredth of a percentage point, over the past four weeks, and more than a full percentage point since the Iran War began in late February. The year-over-year gap is worse: rates now sit more than 70 basis points above last year after running below 2025 levels through July.
"The year-over-year picture is worse: after running below 2025 levels through July, rates are now more than 70 basis points above last year, a gap that has widened quickly because rates were falling last September and are rising this one."
For sellers, higher rates show up as more homes on the market and deeper discounts. For buyers, fewer deals close. That split has become the defining feature of the fall market, and it tracks with existing home sales sliding under the same rate pressure.
Krimmel said listings growth is accelerating at exactly the time of year when its pace usually slows. More sellers are cutting asking prices to draw interest. Buyers are not matching that urgency.
"For sellers, that shows up in growing inventory, with listings growth accelerating at exactly the time of year when its pace usually slows, and in more price reductions. For buyers, the number of homes under contract is down 4.1% year over year."
Delistings stayed quiet. Under 6% of listings nationally came off the market in September, little changed from last year. Krimmel said the data showed no late-summer or early-fall spike that higher rates and softer demand might have triggered. Sellers are staying listed and cutting prices instead of walking away.
That pattern leaves ordinary families stuck between two bad options: stretch for a mortgage that just got more expensive, or keep renting while inventory slowly rebuilds. Would-be buyers already feel the squeeze when mortgage rates climb and monthly payments jump.
The national median listing price fell 1.2% on a monthly basis in September and 1.4% from a year ago, to $419,250. That is still 34.2% higher than September 2019. Median list price per square foot was $223, down 0.6% from the prior month and 1.7% from last year, yet up 48.1% from the same month in 2019.
Price relief is real on a month-to-month basis. It is modest next to the run-up that locked out first-time buyers after the pandemic. The same cooling shows up in metros where home prices have fallen for months as boomtown premiums unwind.
Fall is normally when leverage shifts toward buyers. Krimmel said unexpectedly higher mortgage rates mean even fewer shoppers are showing up than usual this season.
"This is the time of year when leverage usually shifts more toward buyers, but unexpectedly higher mortgage rates means even fewer buyers are showing up than normal this fall."
Krimmel said the next test is whether deeper discounts produce signed contracts or simply leave homes sitting longer. He is watching for multiple cuts in quick succession and for the gap between rising inventory and weak pending sales, a sign of stagnation that will matter in October.
"It is worth watching how deep the discounts get, whether some sellers resort to multiple cuts in quick succession, and if that actually results in more signed contracts or just leaves homes sitting longer."
Pending sales and inventory growth have been diverging for months. More supply without more closings is not a healthy market. It is a stalled one. Financial strain already shows up elsewhere when foreclosure filings surge across local markets.
Behind the monthly figures sits a larger supply problem. Ryan Payne warned that the U.S. housing market faces a shortage of up to 5 million homes, a gap that inventory growth of 5.4% does not close overnight. Ed Brady, president and CEO of the Home Builders Institute, pointed to the other side of the same bottleneck: the urgent need to recruit workers into skilled trades so builders can actually put more houses on the ground.
Price cuts and extra listings help at the margin. They do not fix a shortfall measured in the millions, and they do not train the carpenters, electricians, and plumbers required to build the next wave of homes. Until rates ease or paychecks catch up, buyers will keep waiting, and sellers will keep marking down asking prices that still sit far above pre-pandemic norms.
A market with more homes, fatter discounts, and fewer contracts is not recovering. It is marking time while working families carry the cost.