Fall Housing Market Outlook: Cooling Quickly
The seasonal cooldown for the housing market is shaping up to be extra chilly this fall, swinging negotiating power toward buyers.

The seasonal cooldown for the housing market is shaping up to be extra chilly this fall, swinging negotiating power toward buyers.
The housing market always cools off gradually from midsummer until the holiday season, but this year that cooldown is accelerating at an unusual pace for early autumn. That means the balance of negotiating power is swinging rapidly from sellers to buyers. It is also likely a precursor to slowing home value growth, and even some price declines this fall and winter.
The weekly share of listings with a price cut climbed in late summer, all the way to 9.2% in the week ending September 16: the highest share since November of last year. The weeks after Labor Day often set a high-water mark for this metric, as sellers get anxious that they missed the summer tide of demand and try to revive interest with a price cut before demand slips further away. But even for this time of year 9.2% is quite high – the comparable week in 2019 saw 7.9% of listings with a price cut, which itself was unusually high.
As recently as July, this year’s summer housing market looked more comparable to pre-pandemic norms – the post-Independence Day bump in price cuts hit 8.8% of listings this year, compared to 8.3% in 2019.
This fall’s high rate of price cuts either means buyers have pulled back, sellers have overreached with too-high list prices, or some combination of both.
Since July 2022, the flow of new listings trended almost continuously toward ever deeper seasonal lows. But this August saw an unusual month-over-month increase in new listings, which slashed the year-over-year deficit roughly in half from its July gap. It’s too soon to declare the worst of the new listings drought behind us, but it is an extra point for supply in the supply-and-demand equation that determines the push-pull dynamics of the market.
This is not a bonanza or glut of new listings, by any means. The year-over-year rebound was attributable in part to the freefall in new listings during the second half of last year, which set a low bar for comparison starting this July. Mid-September’s smoothed new listings flow was about 22% lower than the same period in 2019. Still, that’s a smaller gap than earlier this spring, like the 30% difference vs. 2019 observed in the smoothed weekly data ending May 20, and the first step in the right direction we’ve seen in some time.
Between the relative strength of new listings last month, and weaker purchasing flows at the same time, the total count of active inventory continued to climb, like a reservoir slowly refilling. The year-over-year drop in active inventory has turned around and begun to shrink.
The most likely cause for the late-summer pullback in demand is the same force that’s been in the driver’s seat for well over a year now: mortgage interest rates. They climbed higher in August, and 30-year fixed rates have sat above 7% for six weeks running, further discouraging home buyers right as many step away from house-hunting to buckle down for back-to-school and holiday planning. Last year, rates only crested 7% for a couple of weeks on either side of Halloween, and unfortunately, all indicators point toward rates staying high for the near term. The Federal Reserve’s forecasts and language at the September meeting of the Federal Open Market Committee sent markets a message that interest rates will be higher for longer, pushing 10-year Treasury yields — which mortgage rates tend to follow — to their highest levels in 16 years this week.
High mortgage rates have stretched many buyers’ budgets to the breaking point. A typical monthly mortgage payment for buyers reached $1,896 in August, or 18% higher than a year prior, when a payment had already risen 60% from the previous year. Altogether, the monthly principal and interest to buy a typical home has increased 122% in the past three years. So buyers have ample reason to be balking right now.
But why have sellers rushed in? To start, the uptick in new listings last month was more of a pulse than a wave. It may be that some homeowners on the fence about selling this year decided to take the plunge after seeing the surprisingly strong sales posted earlier this summer. It could also be that some folks who opted to delay selling simply couldn’t wait any longer. Life happens: marriage, divorce, new babies, new jobs, have all been proceeding, and for many households experiencing those events, they need to move, sooner or later.
The share of homes that sold for more than their final list price has been gradually declining, from a peak of 41.9% of closed sales in the week ending June 24, to 38.3% in the week ending August 12 (this data metric lags behind others due to delays in obtaining closed-sale price data). If the rising share of price cuts serves as a sign of changing tides in the market, it’s safe to expect fewer of these above-list-price sales in the weeks ahead.
Last winter we observed that higher interest rates seemed to discourage sellers as much, or more than, buyers. That pattern finally broke this August and September, but it’s too soon to tell if the yet-higher interest rates this fall will send sellers back into hibernation until springtime.
For determined buyers, with enough budget room to accommodate the recent jump in mortgage rates, this fall is looking more and more like a sweet spot: There are more motivated sellers and more active listings overall than any time since last December, improving buyers’ chance to find the right fit. That favorable supply setup is coinciding with a negative shock to demand, which means less competition for those home shoppers who remain in the hunt.
Sellers this fall may rue their timing, as this summer’s surprisingly favorable selling conditions fade into memory along with their summer freckles. But even without the benefit of a time machine, it’s still possible to list in prime home-shopping season for those sellers with the privilege of patience. The next one will be kicking off in just about five months, when we will share another update on the spring shopping season outlook, like this year’s report that gave an early alert about competitive heat returning to the market.