Real Estate Rundown October 2026
Price Cuts Climb as Higher Mortgage Rates Slow Buyer Demand
Sellers are cutting home prices at the highest September rate since 2018 as mortgage rates above 7% weaken buyer demand and inventory grows. According to Realtor.com, 20.8% of listings nationwide had price reductions, up 0.9 percentage points from a year earlier, with increases across all four regions and 36 of the 50 largest metros. The West led the trend, with roughly one-third of listings discounted in Salt Lake City, followed by Denver at 31.5% and Portland at 31.3%. With more homes available and fewer buyers competing, buyers have more negotiating power, while motivated sellers must adjust pricing, property condition, and terms to secure a sale.
Expectations for More Fed Rate Hikes Dim Hopes for Borrowing Relief
Mortgage rates rose sharply as stronger-than-expected economic signals, volatile oil prices, and a more hawkish Federal Reserve fueled expectations for additional rate hikes. According to Redfin, markets are now pricing in a federal funds rate of 5% by the end of 2027, reflecting substantially higher rate expectations than a month ago. Upcoming inflation and employment reports, along with remarks from Fed officials, could shape the next move in borrowing costs. Although changes to how inflation is measured may lower the reported core inflation rate, they are unlikely to alter the Fed’s outlook, leaving limited prospects for near-term mortgage rate relief unless underlying economic conditions change.
New Homes Offer Lower Prices per Square Foot in One-Third of Major Markets
Newly built homes are selling for less per square foot than existing homes nationally and in one-third of major markets, according to Zillow. In July, the national median was $205 per square foot for new homes compared with $212 for existing homes, reversing the premium new construction typically commanded in recent years. Discounts were largest in markets with abundant construction, including Austin at 19.3%, Raleigh and San Diego at 14.4%, and Tampa at 12.4%. Elevated inventory is pushing builders to lower prices and offer incentives, while resale inventory remains below pre-pandemic levels and existing homeowners face less pressure to sell. New construction accounted for 12.6% of sales nationally over the past year, but its footprint varied widely, representing more than one-third of sales in San Antonio and Raleigh.
Mortgage Rates Rise for Sixth Straight Week, Pushing Demand to a Two-Year Low
Mortgage rates climbed for the sixth consecutive week, reaching their highest level since November 2023 and pushing mortgage demand to a two-year low. According to the Mortgage Bankers Association, the average 30-year fixed mortgage rate rose to 7.30% last week, while total applications fell 6%. Refinance applications fell 9% for the week and 56% year over year, while home purchase applications declined 4% weekly and 14% annually. Rising home prices added to affordability pressures, prompting more buyers to consider adjustable-rate loans, which accounted for 10.3% of applications. A separate Mortgage News Daily survey showed rates climbing further to 7.58% on Tuesday as bond markets reassessed expectations for Federal Reserve policy, economic growth, and inflation.
Never miss out on industry trends and mover marketing tips by signing up for our monthly newsletter.