The U.S. housing market is showing clearer signs of strain as higher mortgage rates push more sellers to lower their asking prices while fewer buyers move forward with purchases.
In September, 20.8% of active listings had a price reduction, according to Realtor.com’s latest housing report. That was up 0.9 percentage points from a year earlier and marked the highest September level since 2018. It was also the highest share of price-reduced listings in any month since October 2022.
The growing number of price cuts came as mortgage rates climbed sharply during the month, eventually reaching 7.03% on September 24. The increase has made it more difficult for buyers to qualify for or comfortably afford homes, forcing sellers to adjust their expectations in an effort to attract the buyers who remain active.
More Homes Are Coming Onto the Market
Inventory is also moving closer to normal levels.
Realtor.com counted roughly 1.16 million active listings in September, an increase of 5.4% from a year earlier. That narrowed the national inventory gap with typical pre-pandemic levels to just 9.1%, the smallest gap recorded during the current recovery.
Inventory increased across every major region. The Northeast recorded an 11.6% annual increase, followed by the Midwest at 11.3%, the West at 6.2% and the South at 2.6%.
However, the increase in supply is not necessarily the result of a wave of new sellers entering the market. Realtor.com said the number of homes being pulled from the market remained relatively stable, suggesting that more properties are simply staying available for longer as demand weakens.
Prices Are Beginning to Respond
The national median list price fell to $419,250 in September, down 1.4% from a year earlier and 1.2% from August. It marked the 11th consecutive month of year-over-year declines in median asking prices.
Price reductions are particularly common in markets where inventory has grown quickly. In September, 22.8% of listings in the West and 21.6% in the South had price cuts. Salt Lake City, Denver and Portland were among the markets with the highest shares, with reductions affecting more than 30% of listings in each.
The trend suggests that sellers are increasingly having to meet the market rather than simply wait for buyers to accept existing asking prices.
Buyers Have More Leverage—but Less Buying Power
Despite the improving selection, buyer demand remains weak.
The number of homes under contract fell 4.1% year over year, the second consecutive monthly decline and the largest annual drop since March 2025. Pending sales also fell 6.2% from August.
That creates an unusual dynamic: buyers have more homes to choose from and potentially more room to negotiate, but higher borrowing costs are limiting how many buyers can take advantage of that leverage.
The coming months will show whether deeper price reductions can bring buyers back into the market. If mortgage rates remain elevated, sellers may need to make further adjustments through price cuts, concessions or other incentives to get transactions moving.
For now, September's numbers point to a housing market where supply is improving, sellers are becoming more flexible and buyers are gaining negotiating power—but affordability remains the biggest obstacle keeping the market from fully recovering.
Discussion
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