During the contract-signing window, the average 30-year fixed mortgage rate fell from 6.63% at the start of August to 6.13% by mid-September, according to data tracked by Mortgage News Daily. Rates then ticked back up to 6.37% by month-end and have hovered near 6.36% in recent days. Although the late-summer dip encouraged some buyers to lock in loans, subsequent rate volatility continues to pressure affordability.
Supply shrinks after months of gradual growth
For most of 2025, the number of homes on the market had been increasing, but that trend reversed in October. Total inventory slipped 0.7% from the prior month to 1.52 million units. Even with the monthly decline, supply remains nearly 11% higher than a year earlier. At the current sales pace, there is a 4.4-month supply—below the roughly six months many analysts view as a balanced market.
Prices keep climbing despite lean conditions
The median existing-home price reached $415,200, a 2.1% year-over-year gain and the 28th consecutive month of annual increases. Limited inventory, coupled with steady demand, continued to prop up values. Homes stayed on the market for an average of 34 days, compared with 29 days in October 2024.
Affordability challenges persist
Economists noted that lower borrowing costs and a seasonal slowdown in competition could help shoppers in the coming months. Even so, elevated prices and higher financing costs compared with pre-pandemic norms remain significant obstacles, keeping overall sales at historically subdued levels.
First-time buyers regain ground
First-time purchasers represented 32% of transactions in October, up from 27% a year earlier. Their participation, however, varied by region. Tight supply in the Northeast and steep prices in the West limited opportunities, while the Midwest benefited from a relatively abundant stock of affordable properties. The South also saw steady activity, supported by adequate listings.
High-end segment leads growth
Purchases at the upper end of the market outpaced other price tiers. Sales of homes priced above $1 million jumped more than 16% year over year, and transactions in the $750,000 – $1 million range climbed 10%. By contrast, sales of properties between $100,000 and $250,000 increased about 1%, while those below $100,000 fell nearly 3%.
Potential headwinds from government shutdown
Because October closings often rely on contracts inked weeks earlier, the government shutdown that began that month had limited immediate effect on reported sales. Still, transactions requiring flood insurance policies underwritten by federal programs or rural housing loans backed by the U.S. Department of Agriculture may experience processing delays should disruptions persist.
Outlook
Market observers are watching whether the recent slide in mortgage rates, along with the typical winter slowdown, will help relieve price pressures or tempt more owners to list their homes. Much will depend on the broader interest-rate environment and the willingness of current homeowners—many locked into lower-rate mortgages obtained in 2020 and 2021—to put their properties up for sale. The current pullback in inventory suggests sellers remain cautious, potentially keeping upward pressure on prices as 2026 approaches.
For additional perspective on national housing trends and economic indicators, the Federal Reserve’s Beige Book offers regular regional updates that complement NAR’s monthly data.
Crédito da imagem: Smith Collection | Gado | Archive Photos | Getty Images
