**Sources (with links) used for this article are compiled at the bottom. These sources would also be good for further reading/research into the topic.
As we wrap up September 2025 and look ahead to October, there’s a mix of good news and lingering challenges in the real estate and mortgage world. The market is showing signs of balancing out. Homebuyers, sellers, real estate agents, and loan officers are all feeling the effects of high interest rates, but there are also glimmers of relief on the horizon.
Mortgage rates have eased a bit, more houses are available for sale, and home prices are leveling off. Let’s break down what’s happening and what it might mean for you as we move into the fall.
Key Trends Right Now
Mortgage Rates Showing Some Relief
The average 30-year fixed rate is hovering in the mid-6% range, which is down from the peaks we saw earlier this year. In fact, rates dipped to their lowest levels in nearly a year this month, thanks in part to a small Fed rate cut in mid-September. It’s still not “cheap” money, but it’s better than the 7%+ we faced not long ago.
Housing Inventory Finally Improving
We now have over 1 million homes for sale nationwide, about 15–20% more listings than this time last year. Homes are sitting on the market a bit longer (about a week longer on average than a year ago), which means buyers have more choices and a bit more breathing room. However, today’s total inventory is still slightly below what was normal before 2020, so we’re not flooded with homes. It’s just not as ultra-tight as it was.
Home Sales Remain Slow
Higher rates have really pumped the brakes on home sales. Existing-home sales are stuck at an annual pace of around 4 million units, which is the slowest pace in about 30 years. A lot of homeowners are staying put, unwilling to give up their rock-bottom 3% mortgages from a few years ago.
On the flip side, new home sales have been a bright spot. They jumped in August as homebuilders lured buyers with price cuts and special deals. Builders are stepping in to fill some of the gap in housing supply.
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Prices Have Flattened Out
After years of runaway price growth, home prices are basically flat compared to a year ago on the national level. In many markets, prices are no longer climbing, and some are even inching down. We’ve had several months of slight price declines in a row in some areas, and a few of the hottest markets from the past few years are seeing year-over-year price drops of 3–4% now.
Fall 2025 Could Favor Buyers (Finally)
If you’ve got buyers who’ve been on the sidelines, this might be their moment. This fall is shaping up to be the most buyer-friendly market in nearly a decade. There are more listings to choose from, and sellers are more willing to negotiate. We’re already seeing price cuts on stale listings and more seller concessions (like helping with closing costs or mortgage rate buydowns).
Affordability is still a hurdle (high rates and past price gains haven’t disappeared), but any drop in rates or stable prices will help. Early to mid-October is often the best time of year for buyers, because there’s leftover inventory from summer and fewer competitors. It’s a small window of opportunity for those ready to act.
Those are the headlines. Now let’s dig into a bit more detail on each of these points, so you can confidently talk about the market with your clients or colleagues.
Mortgage Rates... A Little Relief at Last
Mortgage rates have been the hot topic all year, and for good reason. After climbing sharply, rates have finally shown some signs of easing. In mid-September, the Federal Reserve trimmed its benchmark rate by 0.25%, the first cut in a long time. This was a signal that perhaps the fight against inflation is turning a corner. Mortgage lenders responded with a small rate drop. In late September, the 30-year fixed mortgage has been hovering around 6.3–6.5% for many borrowers, which is lower than the 7%+ range we saw this spring and summer.
Still High
Make no mistake, 6%+ is still high compared to the ultra-low 3% rates of 2021. Many buyers are still payment-shy, and refinance activity remains low (who wants to refinance a 3.5% loan into a 6.5% loan?). But the recent dip in rates did spark a bit of activity. In fact, mortgage applications jumped noticeably in early September when rates hit their lowest point of the year. That shows there are buyers (and even some refinancers) waiting in the wings for any improvement in rates.
Looking Ahead
Looking ahead, what can we expect for rates? The Fed’s latest signals suggest they may cut rates a couple more times over the next several months if the economy cooperates. Some forecasts predict mortgage rates could hover around the mid-6% range by the end of this year. If inflation keeps calming down, we might even see rates slip below 6% sometime in 2026. But for now, plan on rates in the sixes. The good news is that the direction is finally downward instead of upward.
For loan officers, this means keep an eye out for rate-sensitive borrowers who might be ready to move or refi if rates dip a bit more. And for agents, slightly lower rates could bring some fence-sitters back into the market as we head toward the holidays. It’s not a game-changer yet, but it’s a step in a better direction.
More Homes Are Finally for Sale
One of the biggest challenges recently has been the severe shortage of homes for sale. That tide is slowly turning. National housing inventory has been creeping up, and we’re now consistently above 1 million active listings on the market. That’s a milestone because it hadn’t happened in a while. In fact, there are roughly 16–20% more homes available now than there were a year ago at this time. Simply put, buyers have more options.
Why the Increase?
Partly because homes are staying on the market longer. High prices and high mortgage rates have cooled buyer demand, so the typical home isn’t snatched up within hours like it used to be. Today, the average home is on the market about a week longer than last year before it sells. Those extra days mean listings pile up a bit more over time, boosting the inventory count.
Not Everywhere
However, it’s important to note we’re not back to a buyer’s market everywhere. New listings (i.e., homeowners deciding to sell) are still pretty sparse, actually down slightly from last year. Many homeowners feel “locked in” by their low mortgage rates and are hesitant to sell and buy a new home at a higher rate. About 80% of current mortgage holders have rates under 6%, so there’s a strong incentive to stay put. This means the inventory gains are coming more from homes lingering on the market, rather than a big rush of new sellers.
Region Matters
Region matters a lot here. In parts of the country like the Northeast and Midwest, inventory is still relatively tight. Buyers in those areas are often competing for limited homes, and properties that are priced well are still selling quickly.
In contrast, many markets in the South and West now have more of a balance or even an inventory surplus in some pockets. For example, some Sun Belt cities and parts of Florida have a lot more for-sale signs up, and homes can sit for a while. These regional differences mean professionals need to know their local trends. But nationally, we can say the inventory crunch is easing compared to the extreme lows of the pandemic years.
Double-Edged Sword
For agents, more inventory is a double-edged sword... your buyers have more to choose from (yay!), but your sellers face more competition. Setting the right price and staging are key to avoiding having a listing grow stale. For buyers, this breathing room is welcome. They might not need to waive every contingency or bid wildly over the asking price now. Negotiation is making a comeback, and that’s a healthy thing.
Sales Are Sluggish, But Could Pick Up
With higher rates and more homes to choose from, it’s no surprise that home sales have been sluggish. For roughly the past two years, the annual pace of existing home sales has been stuck around 4 million homes (annualized).
To put that in perspective, we were regularly above 5 million in the late 2010s, and we hit 6+ million during the 2021 boom. So 4 million is slow. In fact, it’s the slowest pace since the mid-1990s. If you feel like you’re working twice as hard for fewer deals, you’re not alone.
Why So Low?
The affordability squeeze is a big part of it. Many would-be buyers simply got priced out when mortgage rates shot up. And many would-be sellers decided to stay put (as mentioned earlier), which keeps a lid on transactions. So owners don’t want to sell, and buyers can’t or won’t chase the prices at 6-7% interest rates.
Might Gradually Improve
That said, there are hints that sales might gradually improve. Lawrence Yun, NAR’s chief economist, noted recently that the combination of slightly lower mortgage rates and slowly growing inventory could bring some buyers back in the coming months.
Basically, the conditions that have kept sales down are starting to ease (even if just a little). If mortgage rates continue to tick down toward 6% and more sellers list their homes, we could see sales volumes increase. We’re not talking about a sudden spike, but perhaps a slow climb out of this rut.
Summer New Home Sales
We also saw a big surge in new home sales over the summer, which suggests buyers will buy if they find something that works for them. Builders have been offering discounts, incentives, and even temporary rate buydowns to get people in the door.
That strategy worked in August, when new single-family home sales jumped by 20% in one month. It’s a reminder that there is pent-up demand lurking out there. Many families still want to move if the conditions are right.
Going Into October
As we go into October, watch those weekly mortgage applications and pending home sales numbers as early indicators. So far, pending sales nationally are about flat to last year, maybe down a hair. There was a tiny uptick recently when rates dipped. If rates hold or fall further, we might see pending sales improve and translate into higher closed sales by late fall.
Managing Expectations
For those of us in the industry, managing expectations is key. If your clients are sellers, be upfront that homes aren’t flying off the shelf in a weekend in most cases. It may take a month or more to sell, and price cuts aren’t uncommon now if a home starts off too expensive.
If your clients are buyers, encourage them that they may have a better shot at getting a home now than at any time in the last 3–5 years. The market is calmer and more balanced than it’s been in a long time, which leads to a more normal buying experience (finally).
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October means spooky savings! This week, take 20% off all real estate and mortgage continuing education courses at Empire Learning. Use code SPOOKY at checkout and fall into the savings while earning those credit hours.
🎃 Browse CE CoursesOffer valid through October 7. Use promo code SPOOKY at checkout.
Home Prices... Cooling Instead of Booming
Although it feels strange to say this, home prices aren’t really rising much anymore. In many areas, they’ve essentially flatlined over the past year. Nationally, the median home price is roughly where it was a year ago, give or take a percent.
Some indices show a tiny uptick year-over-year (like +1% or +2%), but others show a slight decline. In real estate, we call that stable. For once, prices aren’t the headline, and that’s good news for buyers.
Super Local
Now, real estate is super local. Some places are seeing prices down a bit from last year, especially markets that got very overheated. Think of some of those boomtowns or vacation spots. A lot of them are experiencing a gentle correction.
According to recent data, about half of the top 50 metro areas in the U.S. have home prices lower now than a year ago, by around 3-4% on average. That’s not dramatic, but it’s a noteworthy reversal from the days when everything was up 20% year-over-year. Other areas (particularly parts of the Midwest/Northeast) never saw huge spikes, so their prices are basically flat or still inching up a bit.
Not a Crash
It's worth noting that we’re not seeing a crash in prices, just a leveling off. This is more of a market cooldown than a meltdown. Remember, nationwide prices jumped roughly 40-50% in the past five years in an unprecedented growth spurt. So a pause or even a mild dip is a healthy breather. It gives incomes a chance to catch up (at least somewhat) and helps with affordability over time.
Struggling Buyers
For buyers who struggled with bidding wars and rapidly escalating prices, this environment is a relief. You likely won’t have to bid $50k over asking today, and you might even snag a home under the asking price if it’s been listed for a while.
For sellers, it means that pricing strategy is important. Those sky-high comps from last year might not be realistic anymore. Sellers need to price their homes based on current reality, not last year’s peak. Homes will sell if they’re priced right and in good condition, but buyers are much more price-sensitive now.
We’re in a phase where price cuts are common. Roughly a third of listings in some markets have seen a price reduction after a few weeks. It’s all part of the market finding equilibrium.
Stabilized
In short, home prices have stabilized. We expect them to stay relatively flat through the end of the year. If anything, we might see a small overall year-over-year decline by December, especially since prices peaked last fall. But moderate declines are far from a housing crash. It’s more like the market pressing the pause button on price growth for a bit.
Builders Are Back in the Game
A notable bright spot in the current market is new construction. Homebuilders have sensed the gap in resale inventory and are trying to step up. Over the summer, new home sales surged.
August saw a 20.5% jump from July, catching a lot of analysts by surprise. These new homes sold at an annualized pace of about 800,000 units in August, which is 15% higher than a year ago. That’s impressive given the higher rate environment.
What’s Driving It?
Builders are getting creative. They know buyers are rate-shy and budget-stretched, so many builders are offering incentives like mortgage rate buydowns, closing cost assistance, and even price cuts on certain models.
In fact, industry surveys say a majority of builders are using incentives to entice buyers. It’s working because some buyers who can’t find an affordable option in the resale market are turning to new homes, where builders might offer a slightly lower price or a special financing deal.
More Affordable Price Points
Another thing: builders have focused on more affordable price points recently. Nearly 70% of new homes sold in August were under $500k, and about 20% were under $300k. Those lower price tiers are where the buyer demand is strongest.
The median new home price was around $413,500 in August, barely up from last year, which shows builders aren’t dramatically raising prices. They’re trying to move volume instead.
Housing Starts
It’s not all rosy for builders, though. Housing starts (new construction groundbreakings) actually fell in August. Higher costs for materials, fewer available lots, and uncertainty about the economy have made builders a bit cautious about starting too many new projects. Many are completing homes they already began and selling those, rather than breaking ground on a ton of new ones.
Builder Confidence
Builder confidence is lukewarm but holding. The sentiment index for builders was steady in September after falling earlier in the year. Interestingly, builders are more optimistic about the next six months than they’ve been in a while, likely because they expect interest rates to ease and buyer traffic to improve.
Agents & MLOs
For real estate agents, new construction can offer clients options that the resale market isn’t giving them, especially in areas with tight supply of pre-owned homes.
For mortgage officers, builder partnerships can be a source of business (many builders have preferred lenders and offer rate incentives that effectively lower the buyer’s rate for the first couple of years).
Just remember to advise buyers to read the fine print on any builder incentive. Sometimes that “free” rate buydown is built into the home’s price.
Looking Ahead to October 2025 (and Beyond)
As we enter October, what can we expect in the coming weeks? Historically, fall is a slower season after the summer rush. But this year, fall could be a bit busier than usual for the simple reason that many buyers delayed their plans and are still out there looking.
In fact, some experts are calling this fall the best time in years for buyers to make a move. Early October in particular tends to have an overlap of decent inventory and waning competition. So we might see an uptick in sales activity in October compared to the very quiet summer we just had.
Eye on Mortgage Rates
Keep an eye on mortgage rates above all. If we get another piece of good economic news (like inflation coming down or the Fed hinting at more rate cuts), rates could dip further. Even a move from, say, 6.5% to 6.0% could spur more buyers to pull the trigger. Many potential buyers have been waiting for any sign of relief.
On the other hand, if any surprise economic issues pop up or if the Fed changes course, we could see rates hold or even bounce up. Most analysts, though, think we’ve seen the peak in rates for this cycle. The general consensus is that rates will gradually trend down over the next year or two, but in a slow and bumpy fashion.
Year-End Market
By the end of October, we’ll get the official numbers for how the housing market fared in September. That will give us a clearer picture of whether the slight improvements (more inventory, lower rates) translated into higher sales. It will also set the tone for the year-end market.
Typically, November and December see further slowdowns as holidays approach, but serious buyers and sellers remain active. This year, those late-season folks might benefit from even slightly better rates or pricing than we have now, if the current trends continue.
TLDR...
The real estate and mortgage market at the end of September 2025 can be described as cautiously optimistic. We’re not in a frenzy, and we’re not in a freefall. We’re in a middle ground that actually feels a lot more normal and sustainable.
Mortgage rates, while high, are inching down. More homes are available, giving buyers and sellers more opportunities to make a match.
Prices are stable, meaning neither side is at a huge disadvantage. For the first time in a while, buyers have a bit of an upper hand in negotiations, especially in markets with higher inventory. Sellers can still find good buyers, but they have to be realistic and patient.
So, as we head into October, take a moment to appreciate this breather the market is giving us. Stay on top of the trends, keep communicating with clients, and you’ll navigate whatever the next few months bring just fine.
Here’s to a steady and successful fall season in real estate!
Sources
- McKissock Learning – “September 2025 Housing Market Updates” (Kevin Hecht, Sep 25, 2025).
- Realtor.com – “Weekly Housing Trends: Latest Data as of Sept. 20, 2025.” (Jiayi Xu, Sep 25, 2025).
- National Association of Realtors – Existing-Home Sales August 2025 (Press Release Excerpt, Sep 2025).
- Homes for Heroes Blog – “Housing Market Trends September 2025 Key Takeaways.” (Sep 2025).
- Mortgage News Daily – “Biggest Jump in Mortgage Applications Since 2021.” (Matthew Graham, Sep 19, 2025).