The fall housing season was supposed to be different. After a disappointing spring that left many real estate professionals discouraged, experts predicted that declining mortgage rates and optimistic Federal Reserve policies would finally lure hesitant buyers back into the market. The narrative was compelling: with 11-month lows in mortgage rates and growing speculation about future rate cuts, autumn would bring renewed vitality to a housing market that had been languishing. However, as we move deeper into October, it’s becoming increasingly clear that this optimistic scenario hasn’t materialized. The housing market remains stuck in a deep slump, with few signs of the expected rebound. This disconnect between expectations and reality reveals much about the current state of real estate finance and the complex factors that truly influence homebuying decisions.
At the heart of the current market stagnation lies a fundamental mismatch between what buyers can afford and what sellers are asking. While mortgage rates have indeed edged down to around 6.3%, holding near year-to-date lows, this reduction hasn’t been substantial enough to overcome other affordability barriers. Redfin’s chief economist Daryl Fairweather aptly notes that these rates remain within the range we’ve seen since late 2023, hardly the game-changing shift needed to motivate significant buyer activity. The modest improvement in affordability has been completely offset by continued price increases in many markets. This creates a vicious cycle where lower rates don’t translate into more buying power because home prices simply rise to compensate, leaving potential buyers no better off than before.
The disconnect between rate expectations and actual market behavior becomes even clearer when we examine the affordability calculations. Back in July, Zillow researchers made a striking projection: mortgage rates would need to fall all the way to 4.43% before a median-income family could afford a typical American home. This figure is far lower than even the most optimistic projections for near-term rate movements, suggesting that the current 6.3% range is simply insufficient to make homeownership accessible to the average family. This calculation demonstrates why the anticipated fall housing boom hasn’t materialized – we’re still living in a market where homeownership is increasingly out of reach for many, despite the slight rate improvements.
What we’re witnessing in today’s market is essentially a standoff between buyers and sellers, with neither party willing to budge significantly. On one side, buyers remain on the sidelines, waiting for potentially better conditions in the spring. Many potential homebuyers have adopted a wait-and-see approach, gambling that rates might fall further or that prices might cool off. On the other side, sellers who locked in low mortgage rates during the pandemic have the financial flexibility to hold out for their desired prices rather than accepting offers below their expectations. This creates a market equilibrium where inventory gradually increases as new listings come on the market, but sales volumes remain depressed because neither side is willing to meet in the middle.
The evidence of this market stalemate can be seen in the high rate of contract cancellations and pulled listings. According to Redfin data, approximately 56,000 home sales that went under contract in August were ultimately called off, representing about 15% of all contracts – the highest cancellation rate for that month since 2017. This statistic reveals that many transactions are falling apart before closing, likely due to buyers getting cold feet when they realize the true cost of homeownership at current rates or sellers pulling their properties when they don’t receive offers at their desired price points. These failed transactions further depress market confidence and create additional uncertainty for both buyers and sellers.
Geographically, the market dynamics are playing out differently across the country. In San Antonio, Texas, Realtor Mark Stillings reports that the typical small fall uptick in homebuying hasn’t materialized this year. While the best-priced homes still sell quickly, the rest of the inventory is sitting on the market. This creates an interesting dichotomy within the same market, where some properties receive multiple offers while others languish unsold. Stillings notes that sellers are increasingly competing against new construction homes, which offer builder-paid rate buydowns that can significantly reduce buyers’ effective interest rates. This competition puts traditional sellers at a disadvantage, forcing them to either price more competitively or accept longer market times.
In markets like the Northeast and Midwest that have traditionally been hot, there are signs of a gradual shift in power dynamics toward buyers. According to Morgan Guthrie, a real estate agent with Douglas Elliman in Wellesley, Massachusetts, price cuts are becoming more common and days on market are beginning to climb in suburban areas west of Boston. This suggests that while sellers aren’t yet ready to make significant price concessions, they are becoming more flexible in their expectations. Guthrie describes the market as “trying to balance out a little bit,” with buyers present but unwilling to meet current price levels. This delicate balance indicates that we may be approaching a turning point where buyer power continues to grow, especially if inventory levels continue to rise.
The data from Redfin paints a clear picture of this divergent market behavior. Nationally, new listings increased by 4.1% in the four weeks through October 12 compared to the same period last year, while contract signings moved in the opposite direction, declining by 1.2%. This means more properties are coming on the market, but fewer are going under contract. This divergence is particularly telling because it suggests that while sellers are becoming more confident about listing their homes (perhaps encouraged by the slight rate improvement), buyers remain cautious and selective. This mismatch between supply and demand signals that the market is still far from equilibrium and may experience further adjustments before finding a new normal.
The experience of Abby Smith and her Realize Team in Fairlawn, Ohio illustrates how dramatically market conditions can shift even within a single year. Smith reports that sales started strong in 2025, with low inventory and multiple-offer situations driving prices above asking. However, around August, everything “hit the brakes” as inventory began climbing steadily while buyers grew increasingly cautious. Despite this slowdown, Northeast Ohio has still seen some of the fastest home price appreciation in the country, with median prices up about 4% year-over-year in September. This combination of rising prices and slowing sales highlights the disconnect that defines much of the current housing market: sellers are still achieving strong prices, but fewer buyers are willing or able to participate in this market.
Smith’s observation that “buyer affordability continues to get harder and harder” resonates across many markets. Even as mortgage rates have modestly improved, the combination of higher home prices, increased competition, and ongoing economic uncertainty has made homeownership increasingly challenging for the average family. This affordability crisis is particularly acute for first-time buyers who don’t have the equity from a previous home sale to put toward a down payment, and for middle-income families who are being priced out of markets that were once considered affordable. The result is a market where demand remains suppressed despite improvements in financing conditions, suggesting that the fundamental issue isn’t just about mortgage rates but about broader economic accessibility.
Looking ahead, there are indications that the market may be setting up for a potential shift in the spring of 2026. Smith notes that she’s already starting conversations with buyers and sellers who are planning to enter the market next spring, betting that prices may plateau as inventory continues to improve. This pent-up demand could create opportunities for new buyers if market conditions evolve favorably. However, this optimism must be tempered by the understanding that any significant improvement will require either substantial rate decreases, meaningful price adjustments, or both. The current stalemate suggests that we’re in a transitional period where the market is searching for a new equilibrium, but it’s unclear how long this process will take or what the eventual balance between buyers and sellers will look like.
For those navigating this challenging market, the key is to approach homebuying with realistic expectations and strategic planning. First-time buyers should explore all available assistance programs, down payment options, and first-time buyer incentives that might improve affordability. Existing homeowners considering selling should price their homes competitively based on current market conditions rather than peak prices from previous years. For potential buyers who can wait, monitoring inventory trends and being prepared to act quickly when favorable conditions emerge may be the best strategy. Regardless of your position in the market, working with a knowledgeable real estate professional who understands the nuances of your local market can provide invaluable guidance in this complex environment. The current housing market may be frustrating, but it also presents opportunities for those who approach it with patience, information, and realistic expectations.
