AUSTIN – (By Dale King, Realty News Report) – The housing market story thus far this year has been one of mortgage rates running higher than expected – with the outlook looking worse as the year goes on, says the Realtor.com September 2026 Monthly Housing Trends Report .
Although the market rolled with the punches through spring and much of summer, that strength apparently waned in September as mortgage rates surged nearly 40 basis points and climbed above 7% for the first time since January 2025.
The rising mortgage rate trend extended into early October as the average mortgage rate hit 7.49 percent for the week ending Oct. 2 – the highest rate in three years, according to the Mortgage Bankers Association.
These higher mortgage rates are restructuring the autumn housing market, pushing more sellers to reduce the price of homes they’ve just placed on the market while forcing potential buyers to slow their effort to consummate home purchase transactions.
“September’s housing data show that buyers are gaining leverage, but higher mortgage rates are limiting how much of it they can use,” said Danielle Hale, chief economist at Realtor.com. “Inventory is improving and more sellers are adjusting their prices, yet the decline in pending sales makes clear that affordability remains a central constraint as autumn gets underway.”
“The coming weeks,” Hall said, “can be an opportunity for well-prepared buyers, who can navigate today’s higher financing costs, to find more choices, less competition and greater room to negotiate.”
The share of active listings impacted by a price reduction rose to 20.8% in September, up 0.9 percentage points from a year earlier to register the highest September tally on record.
At the same time, active listing inventory grew 5.4% year over year to more than 1,161,000 homes, narrowing the gap to about 9.1% — virtually hitting pre-pandemic levels and marking the first time the breach has fallen below 10% during the current market recovery period. The stock of homes under contract declined 4.1% year over year, marking a second consecutive monthly decline and the steepest annual drop since March 2025.
The Realtor.com report says the national median list price of a home was $419,250 in September, down 1.2% from August and 1.4% less than homes cost a year ago. This was the 11th consecutive month of annual list-price declines.
Price per square foot, which changes to reflect the size mix of homes for sale, fell 1.7% year over year. Homes spent a median of 61 days on the market — one day longer than in August but one day fewer than a year earlier.
More Choices, More Caution
Inventory growth accelerated even as the usual seasonal pace of new supply slowed. Active listings rose 5.4% from a year earlier, the fastest annual gain in six months, while new listings slipped 0.7% year over year to fewer than 395,000.
The Northeast and Midwest led inventory growth, up 11.6% and 11.3%, respectively, while the West (+6.2%) and South (+2.6%) also posted gains. Forty-three of the nation’s 50 largest metros recorded more homes for sale than a year ago.
“More homes are available than a year ago, and the inventory gap with the pre-pandemic market is closing,” said Jake Krimmel, senior economist at Realtor.com. “But the source of that improvement is arriving as demand cools in response to higher borrowing costs, not because a new wave of sellers is rushing to market.”
“Recent moves in mortgage rates weighed on the housing market in September. Rates are up nearly 40 basis points over the past four weeks, and over a full percentage point since the Iran War began in late February.
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 year.
For sellers, that shows up in growing inventory – with listings increasing at just 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.
Sellers Cut Prices Everywhere
All four regions posted a higher share of price-reduced listings than a year ago for the first time in 2026. Price cuts were most common in the West (22.8% of listings), South (21.6%) and Midwest (20.7%) and least common in the Northeast (15.2%). The West recorded the largest annual increase, up 1.8 percentage points from a year earlier.
“Price cuts and delistings tell two different parts of the seller story,” Krimmel said. “More owners are acknowledging that today’s buyers need a lower price, but they are still choosing to stay in the market rather than walk away. That is healthier than a widespread retreat.”
Among the 50 largest metros, price reductions were most common in Salt Lake City (33.6%), Denver (32.1%) and Portland, Ore. (31.6%). They were least common in New York (10.3%), Hartford (12.6%) and Buffalo (12.9%). Thirty-six of the 50 largest metros had a higher price-cut share than a year ago, up from 27 in August.
A Divided Market
The national price agenda continued to mask meaningful regional variation. Median list prices fell year over year in the Northeast (-3.8%), South (-2.4%) and West (-0.8%), while the Midwest was flat for a second straight month.
On a price-per-square-foot basis, 37 of the 50 largest metros posted annual declines. Austin (-8.4%), Tampa (-6.0%) and San Francisco (-4.3%) saw the largest declines while Providence (+8.9%), Indianapolis (+4.7%) and Hartford (+3.6%) posted the largest gains.
What’s Coming Next?
As the market heads deeper into fall, the key test will be how sellers respond if higher rates continue to constrain demand. Realtor.com economists will monitor the depth and frequency of price reductions, whether price cuts generate more signed contracts and whether sellers begin to delist homes at a higher rate. The divergence between rising inventory and falling pending sales will also be a key to whether the market is moving toward a more prolonged period of stagnation.
Krimmel advised: “This is the time of year when leverage usually shifts more toward buyers, but unexpectedly higher mortgage rates mean even fewer buyers are showing up than normal this fall.”
“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.”
He added: “Pending sales and inventory growth have been diverging for a few months now, a sign of stagnation that will be worth following in October.”
Oct. 8, 2026, Realty News Report Copyright 2026
Photo credit: Realty News Report, Copyright 2026
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