Homebuyers continue to back out, but sellers are still digging in, refusing to lower prices or give up. As a result, the housing market that was frozen in September was frozen in October, resulting in an increasingly bloated market.
According to Realtor.com, available inventory reached 183,500 units in October, an increase of 7.4% from a year ago. This is the highest annual growth rate in the past eight months. Since February, the number of active listings has increased every month. This is despite the fact that the number of new listings is actually decreasing, down 7.5% from October 2025.
The market has been in extremely short supply in recent years due to a frenzy of home buying that drove mortgage rates to record lows during the first two years of the pandemic. National supply is now just 6.6% below typical pre-pandemic levels, the narrowest gap since the pandemic.
“The market is cooling on both sides, but in different ways,” said Daniel Hale, chief economist at Realtor.com. “Buyers are holding back as higher mortgage rates reduce their purchasing power, while sellers are listing less frequently without a significant increase in delistings or discounts.” “While new supply has been paused, owners who have already put their homes on the market appear to be taking little step forward.”
Just over 20% of sellers reduced their prices in October, about the same number as in September and October of last year. There was also no significant increase in delistings by sellers.
Mortgage interest rates fell slightly in October compared to the previous month, but are still more than 1 percentage point higher than a year ago. This continued to put pressure on sales. New pending sales, which represent signed contracts rather than closed deals, fell 16.8% in October from a year earlier, according to Zillow. This was the largest annual decline since August 2023, and the lowest for October since 2018.
Interest rates fell slightly, but home prices continued to rise. Zillow estimated the monthly mortgage payment for a typical U.S. home at $2,004 in October, assuming a 20% down payment and excluding taxes and insurance. This was a 12.8% increase from the previous year and a 4.8% increase from September, marking the largest single month increase in four years.
“November is expected to be an even bigger recession, but the silver lining is that next month is likely to be the worst,” Zillow chief economist Misha Fisher said in a release. “We expect the pace of economic slowdown to ease into the new year. There will be deals for buyers who can withstand affordability headwinds in the coming months, and continued inventory build-up means that if we get interest rate relief, there will be a strong upside in sales into next year.”
