📈 Market Highlight: Wake Me Up When September Ends

Mortgage rates dipped to the mid-6% range as we entered September, while housing inventory is up from last year but still below pre-pandemic norms. This month’s update covers affordability challenges, buyer and seller dynamics, and key policy changes.

By Christian Hill 12 min read
📈 Market Highlight: Wake Me Up When September Ends

**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.

Month of September: In the month of September, the national real estate and mortgage market is navigating a tricky balancing act. Both real estate agents and mortgage loan originators (MLOs) are finding that 2025’s housing scene feels very different from previous years. High mortgage rates have defined the summer, creating a bit of a “cruel summer” standoff between cautious buyers and stubborn sellers. Yet there are also bright spots, like stabilizing home prices and hints of relief on the rate front, that provide reasons for optimism as we head into the fall.

Mortgage Rates and Affordability

Mortgage rates remain elevated but have recently inched down to their lowest levels in about ten months. As of the start of September, the average 30-year fixed rate hovers around the mid-6% range. This is similar to a year ago (rates were in the mid-6s last Labor Day as well), and of course, significantly higher than the ultra-low 3% rates borrowers enjoyed a few years back. For loan officers, that means refinance business is quiet. Few homeowners want to give up their sub-4% rates, but purchase loans are still moving for those who need to buy a home.

Weaker Affordability

The flip side of higher rates is weaker affordability. Higher interest costs have added hundreds of dollars to typical monthly payments, offsetting the tiny dip in home prices we’ve seen since 2022. In fact, the national median listing price is roughly the same now as it was three years ago, but today’s mortgage rates are much higher.

So buyers are paying around $270 more per month on a median-priced home compared to 2022, even though the sticker price hasn’t changed much. That “double whammy” of high prices and high rates continues to squeeze buyers’ budgets.

Buyers Feel Locked Out

According to industry reports, only about 28% of homes on the market today are affordable to a typical household, down sharply from roughly 50% in 2019. It’s no surprise many first-time buyers feel locked out of the market, or are turning to creative strategies like adjustable-rate mortgages and seller-paid rate buydowns to make the numbers work.

Affordability is front and center in clients’ minds. As an MLO or real estate agent, you’re likely hearing the question “Can we really afford this?” more than ever. Helping buyers navigate financing options and realistic price points is important in this environment.

Housing Inventory and Prices

One of the big stories in 2025 has been the slow rebuilding of housing inventory, though it’s still not nearly enough to fully meet demand. Active listings nationwide have been running about 15–20% higher than last year’s ultra-tight levels. We’ve been hovering around 1.1 million homes for sale in recent weeks, which is an improvement from the pandemic-era drought of listings.

For perspective, however, today’s inventory is still well below pre-2020. Many homeowners remain reluctant to sell, since moving could mean trading a 3% mortgage for one near 7%. This “lock-in effect” has kept a lid on the number of existing homes coming to market.

Median Existing-Home Sales Price

New listings did tick up slightly over the summer (we typically see a late-summer uptick in listings), but not enough to satisfy all the buyers out there. With limited supply and only tepid demand, home prices have essentially hit pause. Nationally, the median existing-home sales price is around $420,000, which is basically flat compared to a year ago. In fact, for several weeks now, the median listing price has shown zero year-over-year growth, and the price per square foot is flat as well. We appear to be entering a period of relative pricing stability.

Sellers Losing Upper Hand

Sellers have lost some of the upper hand they held in previous years, but they’re also not slashing prices dramatically. Instead, we’re seeing a stalemate. Many sellers would rather hold off or even pull their home off the market than drop their price too far.

About one in five sellers has reduced their asking price this summer, but others are simply waiting for a better market. This dynamic has kept prices remarkably sticky even as sales volumes are down. For agents, that means home values in your area probably haven’t fallen much, but you might need to coach sellers on realistic pricing, since today’s buyers are much more price-sensitive.

Newly Built Homes

There’s one segment where prices have softened a bit... newly built homes. Builders ramped up construction to capitalize on the inventory shortage, and now new home inventory is relatively high. In fact, the supply of newly built houses for sale is at its highest level since 2007, with roughly 9 months of new-home inventory available (far above the ~4 months’ supply for existing homes).

Many builders have plenty of completed houses sitting on the market. To move this backlog, builders are offering incentives and price cuts. Recent surveys show the share of builders reducing prices is the highest it’s been since 2022, reflecting their need to attract rate-wary buyers. The median new home price in July was about $404,000, down around 6% from a year earlier.

This is good news for buyers shopping for new construction. There may be deals or builder-paid perks (upgraded features, mortgage rate buydowns, etc.) to be had. However, it also means tougher competition for anyone selling a similar, nearly-new home. Overall, even with some cooling in the new-home market, we aren’t seeing a dramatic crash in values.

The housing market’s floor is supported by that persistent shortage of homes (the country is still a few million units short of what’s needed), and by the fact that most existing homeowners are in strong financial shape and under no pressure to sell at a loss. So, prices are bending a little in spots, but not breaking.

Sales and Market Activity

Homes are still changing hands, but the pace is noticeably slower than in a typical hot market. This summer, existing-home sales have been slogging along at an annual rate of around 4.0 million (according to NAR data), which is a multi-year low. Compared to 2021, when over 6 million homes were sold annually, it’s clear we’re in a cooler period now.

Mortgage Application Volumes

Likewise, mortgage application volumes for home purchases have been relatively subdued, bouncing up and down week-to-week but generally hovering near last year’s very slow levels.

Many prospective buyers are in “wait and see” mode, holding off until either rates come down further or more homes hit the market. Those who are actively house-hunting are taking their time and driving hard bargains, a big change from the bidding wars we saw not so long ago.

Longer Time on Market

Properties are also spending longer on the market now. The average home is taking about a week more to sell than it did a year ago. Buyers have more leverage to insist on inspections, negotiate repairs, or even include contingencies that would have been deal-killers during the peak boom.

This more patient pace means both parties can breathe a little easier through the transaction process.

Bidding Wars Less Common

Bidding wars are far less common these days. Well-priced, move-in-ready homes can still attract multiple offers (there are always eager buyers for the cream-of-the-crop listings), but generally, buyers don’t feel the need to panic-buy above asking price now.

Seller Side

Real estate agents are finding that pricing strategy and marketing are more important than ever. An overpriced listing will just sit unsold. Indeed, we’re seeing some homes stagnate on the market and eventually get delisted if sellers don’t get their price. Setting the right expectations with sellers is key in this environment.

Buyer Side

On the buyer side, those who are in the market tend to be motivated by life changes (growing families, relocations for work, etc.) They’re also adjusting their expectations, perhaps settling for a smaller home or a farther-out location to make the budget work.

For loan originators, every purchase client counts in a slow market like this, and providing excellent service (and creative financing solutions) can make all the difference in winning referrals.

Purchase Loan Applications

There’s a bit of encouraging news hidden in the mortgage data... purchase loan applications have actually shown year-over-year increases on several occasions this year. We even saw some double-digit percentage jumps in purchase applications versus the comparable weeks of 2024, something we hadn’t seen in a long time.

Now, this is largely because last year’s volumes were so low (making for easier comps), but it does hint that buyer demand may have bottomed out and is inching back up. It’s not a surge by any means, but it suggests the market is finding its footing rather than deteriorating further.

Refinance Activity

Meanwhile, refinance activity remains extremely low. Almost nobody with a 3% mortgage is going to refinance into a 6.5% rate. The only refis happening are mostly cash-out refinances (folks tapping equity for other needs) or other unique situations.

For MLOs, that means focusing on purchase business (and perhaps home equity loans or lines of credit) is the smart play for now. Keep an eye on any dip in rates, though. Even a modest decline could open a brief window of refinance opportunities for borrowers who missed the last refi wave.

Policy Updates

Recent policy moves and news are also shaping the landscape. Here are a few developments that both agents and MLOs should keep an eye on.

Federal Reserve and Interest Rates

The Fed’s aggressive rate hikes over the past two years are the main reason mortgage rates jumped so high. The good news is that the Fed has hit the pause button lately, and there’s even talk of a possible rate cut sometime soon if inflation continues to cool.

All eyes are on the Fed’s mid-September meeting. If the Fed does start cutting its benchmark rate (or even just signals a friendlier stance on rates), we could see mortgage rates drift down further in the coming months. That would be a welcome relief for buyers and could bring some fence-sitters back into the market.

Of course, nothing is guaranteed (the Fed is weighing inflation versus recession risks), but this is the closest we’ve been in a while to seeing some rate relief on the horizon.

Government Programs for Buyers

Housing affordability has become a hot topic in Washington. The Biden administration has floated ideas like a $25,000 down payment assistance credit for first-generation homebuyers and increased funding to help build more affordable homes. While those big proposals are still working their way through the political process (and are not law yet), the administration did take some smaller, concrete steps.

Earlier this year, for instance, FHA reduced its mortgage insurance premiums by 0.30%. That cut now saves new FHA borrowers on average a few hundred dollars per year – every bit helps when budgets are tight. Fannie Mae and Freddie Mac (the conventional loan agencies) also adjusted their fee structures this spring in a way that lowers costs for many first-time and low-income buyers (while slightly raising fees for some borrowers with higher credit scores or larger down payments).

The goal was to expand homeownership opportunities for underserved groups. These changes stirred some controversy in the industry, but they are now in effect. So, loan officers should be aware of the new pricing grids for conforming loans, and agents should know that some clients might now qualify a little more easily for conventional financing.

Housing Supply and Zoning Initiatives

Another policy focus has been boosting the housing supply. Federal grants have been offered to cities and states that reform zoning laws and streamline permits, all aimed at encouraging more home construction. This is a long-term play (it won’t solve the inventory crunch overnight), but it’s worth noting that lawmakers are trying to tackle the root cause of high home prices (namely, not enough houses).

The administration has also put money toward converting unused commercial properties into residential units and other creative ways to increase housing stock. For agents, any measures that add inventory down the line could be a game-changer, expanding the options you can show to buyers.

And for MLOs, more new construction can mean more lending opportunities (newly built homes often come with incentives that involve preferred lenders, so it’s good to cultivate relationships with builders if you can).

Other Regulatory Changes

In the mortgage world, a few other tweaks have happened recently. VA loans saw a slight reduction in funding fees in 2023, making VA mortgages a tad cheaper for veteran buyers going forward.

Additionally, there are new loss-mitigation options for struggling borrowers. For example, FHA now allows 40-year loan modifications to help people reduce their payments if they’re in danger of default. The overall mortgage delinquency rate remains near historic lows, but if the economy softens, these relief options could become important.

On the topic of distressed properties, we have not seen a wave of foreclosures. Lenders did start a few more foreclosures this year than last year (a modest increase as pandemic-era protections have fully expired), but foreclosure activity is still well below normal pre-pandemic levels.

Most homeowners today have significant equity and fixed low interest rates, so they’re not under the same pressure we saw back in 2008. This means the odds of a sudden flood of cheap foreclosures hitting the market are low. From a policy standpoint, the focus remains on keeping homeownership sustainable and expanding access, rather than dealing with any crash scenario.

Looking Ahead

What can we expect as we move further into September and the fall season? Traditionally, early fall brings a mini-flurry of real estate activity. Many sellers rush to list around Labor Day, hoping to find a buyer before the holidays. Indeed, September is often one of the busiest months for new listings.

Buyers who took summer vacations often return to house-hunting with renewed focus once school is back in session. We’re likely to see a bit of that seasonal bump this year as well. Real estate agents might find their phones ringing a little more in the coming weeks with clients ready to make a move before year-end.

Boom Not Expected

However, the fall market in 2025 is not expected to suddenly boom. It’ll probably be steady as she goes. Any boost in sales from fresh listings could be tempered by the reality of those still-high mortgage rates. If rates continue to ease down into the low-6% range, we could see more buyers gradually emerge. In fact, some optimistic industry observers predict this fall could be a bit more active than last fall, especially if the Fed delivers a rate cut.

There’s a lot of pent-up demand out there (think of all the millennials and first-time buyers who delayed purchasing in 2022–2023 when rates spiked). Even a modest improvement in affordability might entice some of them back into the market.

So, loan officers and agents should be prepared. If rates dip, you might get a burst of new applications and showing requests. It’s a good idea to stay in touch with pre-approved buyers and keep them updated on rate movements, and to remind potential sellers that more buyers could be shopping if financing becomes a bit cheaper.

Headwinds

On the flip side, we have to acknowledge some headwinds. Economic uncertainty is still in the air. Chatter about a possible recession hasn’t completely gone away. If the job market weakens more or if consumer confidence dips, that could put a damper on housing activity. Additionally, the restart of student loan payments (after a long pause) this fall means millions of Americans will have a new monthly expense.

That could impact some would-be homebuyers’ debt-to-income ratios and overall budgets, potentially sidelining a few buyers, particularly younger ones. These factors suggest that while the market will keep chugging along, we shouldn’t expect a return to 2021-style frenzied conditions just yet. It’s likely to be a gradually improving situation rather than an overnight turnaround.

Challenges Ahead

All told, the early-September housing market can be described as balanced in some ways, yet still challenged. For the first time in a while, buyers have a bit more negotiating power and a few more homes to choose from than they did last year. Sellers, meanwhile, are adjusting to a new normal – homes aren’t flying off the shelf in days, but most will still sell eventually if priced and presented well.

For MLOs, the key is staying agile. Focus on purchase business, highlight creative financing options to help with affordability, and be ready to act if (or when) rates slide down and refinancing opportunities reappear. Both agents and loan officers are having to work a little harder for each deal these days, but those who stay informed and adaptable are still finding ways to succeed.

Good News

The good news is that we seem to be in a period of relative stability. Home prices aren’t see-sawing dramatically; instead, they’re holding steady or gently flattening out. The market is inching toward a healthier equilibrium after the frenetic ups and downs of the past few years.

It may feel like a grind at times (a slow, stagnant summer isn’t as exciting as a red-hot one), but a slow, stable market is far better than a boom-and-bust scenario in the long run.

As we step into September, real estate professionals can take a measured, proactive approach. Keep educating clients on the latest trends, set realistic expectations, and watch for those opportunities (like a dip in rates or a wave of new listings) to help more people achieve their homeownership goals. The housing market’s story this month is one of resilience and patience.

Staying informed and supporting each other (agents and MLOs working together as the dream team!) means we’ll be ready to make the most of whatever September brings.

Sources

General