Redfin, Realtor, Reality: Signs of a Housing Shift

Redfin, Realtor, Reality: Signs of a Housing Shift

• There were 1.55 million existing homes for sale in September.
• That equals 4.6 months’ worth of supply.
• The median sales price dropped 2% compared to August.

The housing market’s COVID high has given way to a sobering pandemic hangover…

This past weekend, I was driving home from running errands when I was thrown off by what had once been a common sight. Driving through a familiar neighborhood, I saw multiple "For Sale" signs.  Then, earlier this week, while taking my son to soccer practice, I saw the same thing on the other side of town.

The images stuck with me because they stood in stark contrast to just a few years ago. Now, don’t get me wrong, it’s not like there’s a sign in every yard. But to see a small cluster after barely seeing any for so long? That’s a clear sign the tide is turning.

Recently, I was digging through Redfin’s monthly housing metrics and saw that homes are now selling at one of the slowest paces in a decade. In September, properties sat on the market for an average of 51 days. That’s not just a slowdown, it’s a reset. For context: last year it was 42 days, and in 2021, just 21. The last time we saw this kind of stagnation was back in 2015, when the average was 55 days.

The National Association of Realtors (“NAR”) confirmed the trend yesterday. Existing home sales held steady at an annualized pace of 4.06 million—still stuck at the bottom of a multi-year range.

And the reason behind the slowdown? The COVID-era mortgage boom.

Thanks to ultra-low interest rates at the time, nearly 78% of homeowners hold mortgages below 5%, with 59% under 4%, and 22% locked in under 3%, according to Goldman Sachs. Compare that to today’s 6.3% rate on a conventional 30-year mortgage. Sellers don’t want to give up their low rates and payments. Buyers don’t want to pay up for new ones. Homeowners are more likely to refinance than to pack up and move. Until borrowing costs drop enough to change that equation, inventory is likely to build.

NAR’s latest data shows the number of available homes rose from 1.53 million in August to 1.55 million in September, keeping supply above pre-pandemic levels. That shift is putting pressure on prices. It should help keep a lid on inflation growth and leave the door open for the Fed to continue cutting rates. That, in turn, should support a steady rally in the S&P 500.

But don’t take my word for it, let’s look at what the data is telling us…

Each month, NAR releases a suite of housing indicators. Existing home sales typically account for 85–90% of total annual volume, making them a key gauge of market health. In September, months’ supply—a measure of how long it would take to sell all listed homes—held steady at 4.6. That’s just below June’s 4.7, but still one of the highest readings in over seven years.

Buyers now have options. While NAR’s numbers on time-on-market were lower than Redfin’s, the trend was the same. Properties lingered for 62 days in September, up from 55 a year ago. In fact, for several months now, total inventories have hovered near their highest level since May 2020.

And prices? They’re slipping.

Realtor.com reports the median listing price per square foot was $226 in September, down from $228 in August and off 0.4% year-over-year. That’s the first annualized decline since June 2023, and a far cry from the 21% surge we saw in June 2021. The data hasn’t looked this soft since the Fed was still hiking.

The same story plays out in sale prices. NAR says the median price of an existing home sold in September was just over $415,000, up 2% year-over-year. But that’s down 2% from August, and a long way from the 25% peak surge in June 2021. September marked the sixth straight month of annualized growth holding at 2% or less. The last time we saw a similar stretch was mid-2023, just before the Fed ended its tightening cycle.

At the end of the day, high inventory is capping prices. The Fed’s cautious stance on rate cuts is keeping buyers on the sidelines. With families focused on school and the holidays, and homeowners more likely to refinance than relocate, it could be a while before the sales pace heats up.

Housing prices make up roughly 35% of the Consumer Price Index (CPI) and 17% of the Personal Consumption Expenditures (PCE) index. Falling prices are likely to weigh on sentiment around rental pricing power. That, in turn, could drag down owners’ equivalent rent, a key component of both CPI and PCE. So, swelling supply should help tame inflation in the months ahead and boost the odds of future rate cuts, supporting a steady rally in the S&P 500.

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