Home listings keep climbing as buyers pull back and sellers hold prices

Homes on Padre Island, Texas. Photo: Matthew T Rader, CC BY-SA 4.0, via Wikimedia Commons.

The supply of homes for sale is the closest it has been to pre-pandemic levels, and fewer people are signing contracts to buy them. What has not happened, at least not yet, is a wave of price cuts. October’s housing numbers, released over the past week by Realtor.com and Zillow, describe a market where both sides have mostly stopped moving.

Active listings reached 1,183,520 in October, up 7.4% from a year earlier, according to Realtor.com’s monthly housing report. That was the fourth straight month of faster inventory growth and the biggest annual gain since February. National supply is now just 6.6% below typical 2017 to 2019 levels, the smallest gap the company has recorded since the pandemic.

The growth is not coming from a rush of new sellers. New listings fell 7.5% from last October, the steepest drop since September 2023. Inventory is building because fewer homes are going under contract and sellers are not pulling their listings. The median home spent 63 days on the market, a day longer than a year ago.

Buyers are the ones stepping back

Contract signings fell 17% from a year earlier, Realtor.com found, the lowest October on record in its data. Zillow measured something similar: newly pending listings were down 16.8%, the largest annual decline since August 2023 and the slowest October since 2018, according to its October market report.

The reason is mostly the cost of borrowing. The 30-year fixed rate averaged 7.33% in October and peaked near 7.40% in the middle of the month, more than a full percentage point above a year earlier. Zillow estimates the monthly mortgage payment on a typical home, with 20% down and before taxes and insurance, was $2,004 in October. That is 12.8% higher than a year ago and 4.8% higher than in September, the biggest one-month jump in four years, even though home values themselves barely moved: the Zillow Home Value Index sits at $364,812, up 0.7% from last year.

“Buyers are stepping back as higher mortgage rates cut into their buying power, while sellers are listing less often without a broad increase in delistings or price cuts,” Realtor.com chief economist Danielle Hale said, as quoted by CNBC.

Sellers are waiting it out

About 20.5% of listings had a price cut in October, only 0.2 percentage points more than a year earlier and slightly fewer than in September. The share of listings pulled off the market was 4.4%, compared with 4.6% last October. The national median list price was $415,000, down 2.2% from a year ago, the 12th month in a row of annual declines.

The picture varies a lot by region. Inventory rose 16.5% in the Northeast and 13.8% in the Midwest, the two regions that were furthest below pre-pandemic supply. The South rose just 3.8%. Among large metros, Buffalo, Minneapolis and Seattle posted the biggest inventory gains, each above 30%, while listings fell in Jacksonville, Miami and San Francisco.

The two companies count homes differently, so their totals don’t match. Zillow tallied about 1.4 million homes for sale in October, up 3.4% from a year earlier. Both point in the same direction.

What comes next

Zillow expects November to be weaker still, though its report says that month “is likely going to be the worst of it,” with the slowdown easing into the new year, and notes that buyers often have more room to bargain before the holidays. Rates have eased a little since mid-October: Freddie Mac’s 30-year average was 7.18% last week, Hale wrote in Realtor.com’s week-ahead note.

This week brings the October consumer price index and the National Association of Realtors’ existing-home sales report, which Hale said is likely to be “very disappointing.” Rents, meanwhile, keep climbing. Zillow’s rent index was $1,913 in October, up 2.9% from a year earlier, its strongest annual gain in 19 months.

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