This September 2025 Housing Market Update highlights falling mortgage rates, renewed buyer demand, and the economic forces shaping real estate today. Affordability improved as rates dropped to an 11-month low, sparking a surge in applications. Yet, with job growth stalling and sellers remaining cautious, transaction volume is likely to stay muted even as buyers gain leverage.
Mortgage Rates & Buyer Activity
30-Year Fixed Mortgage Rate: Fell to 6.25%, the lowest in 11 months.
Buyer Response: Mortgage application volume surged 9.2% in early September. Purchase applications rose 6.6%, while refinance activity jumped 12.2%.
Affordability Boost: The median U.S. mortgage payment dropped to $2,604, more than $200 below May’s peak. Buyers gained an additional $20,000 in purchasing power since midsummer.
The Economic Backdrop
Jobs Data: Only 22,000 jobs were added in August, far below the 75,000 forecast. Unemployment rose to 4.3%, the highest since 2021.
Long-Term Joblessness: 1.9 million Americans have been unemployed for 27 weeks or longer, representing 25.7% of all unemployed.
Inflation: The Consumer Price Index rose 2.9% year-over-year, marking the fourth straight monthly increase. Core inflation (excluding food and energy) remained elevated at 3.1%.
Policy Outlook: The Fed has signaled greater concern about labor market weakness, with markets now pricing in a likely 25-basis-point rate cut at the September 17th meeting.
National Housing Performance
Existing-Home Sales (July): Up 2.0% month-over-month to an annual rate of 4.01M.
Median Sale Price: $422,400, up 0.2% year-over-year.
Pending Home Sales: Down 0.4% month-over-month but up 0.7% year-over-year.
Active Listings: +20.9% year-over-year in August, though still 14.3% below pre-pandemic levels.
Days on Market: Homes averaged 60 days, one week longer than last year.
Supply: Months of inventory rose to 4.6 months, nearing balance.
Regional Trends
The national averages mask a growing divide:
Northeast & Midwest: Prices and demand remain resilient, though inventory is still far below pre-pandemic levels.
South & West: Former boomtowns are cooling, with falling prices, rising days on market, and inventory levels above pre-pandemic benchmarks.
This divergence is reshaping housing wealth. Florida, California, and Texas lost a combined $247 billion in value over the past year, while New York alone gained $216 billion.
Buyer & Seller Demographics
Dominant Buyer Group: Baby Boomers now represent 42% of buyers, surpassing Millennials at 29%.
Sellers: Baby Boomers also account for 53% of listings.
Cash Buyers: 51% of Older Boomers (ages 70–78) purchased homes in all cash.
First-Time Buyers: Dropped to a historic low of 24%, with the median first-time buyer age now 38.
International Buyers: Purchased $56B in U.S. real estate in the past year, with nearly half of those transactions paid in cash.
Policy Developments
Federal Action: The ROAD to Housing Act of 2025 passed out of committee unanimously. Its focus: incentivizing zoning reform, streamlining permits, and promoting lower-cost housing options.
State Action: States like Texas, Washington, and Montana are enacting zoning, ADU, and parking reforms to accelerate new housing supply.
Concluding Analysis & Forward Outlook
The September 2025 housing market continues to balance affordability gains against economic headwinds. Lower rates have given buyers a welcome boost in purchasing power, but weak job growth and seller hesitation are limiting overall activity. A major price correction remains unlikely thanks to cash-heavy Baby Boomer buyers and international investors, yet transaction volume is expected to remain low through year-end as the market slowly rebalances.
For Homebuyers: Cautious Leverage
Mortgage rates at an 11-month low and a 20.9% increase in active listings provide the strongest negotiating position in over a year. With homes spending an average of 60 days on market, buyers have more time to evaluate options. Still, economic uncertainty and a three-year-high unemployment rate underscore the importance of careful financial planning.
For Home Sellers: Grounded Expectations
Flat prices and a projected 0.9% decline by year-end mean the peak of seller power has passed. Expect longer timelines, more negotiations, and buyers who are entering the market with increased leverage. Sellers who price homes for today’s market—not last spring’s highs—will be best positioned to achieve a successful sale.
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