U.S. Home Prices Slip for the First Time in More Than Three Years as Demand Weakens

U.S. home-sale prices have fallen for the first time in more than three years, signaling a notable turn in the housing market as high mortgage costs, softening buyer demand and rising inventory add pressure to residential real estate. According to a Redfin housing report, the median U.S. home-sale price dipped 0.1% from a year earlier to $389,601 in the four weeks ending October 25.

The drop came after three straight years of annual price gains and marked the second consecutive week of lower home-sale prices. In the prior reporting period, prices slipped 0.2%, a sign that the market’s long stretch of appreciation is losing steam.

Buyers continue to face some of the costliest conditions for homeownership on record. Even though mortgage rates have eased a bit from recent highs, expensive financing and still-elevated home values are continuing to hurt affordability and suppress demand.

Redfin’s latest analysis, released October 29, showed the typical homebuyer’s monthly mortgage payment at $2,786, up 10.7% from a year earlier. That was the second-highest level in the company’s data, trailing only the prior week.

The weekly average mortgage rate was 7.32%, down from 7.4% the week before but still close to a three-year high.

Buyer Demand Falls to a Record Low

The squeeze on affordability is showing up in housing activity. Pending home sales dropped 1.8% week over week to 276,352, the lowest reading in Redfin’s records going back to 2021. Compared with a year earlier, pending sales were down 15.9%.

Pending sales also fell across all 50 of the largest metropolitan areas Redfin tracks for a third straight week, suggesting that weaker demand is affecting nearly every major U.S. housing market.

Seattle posted the sharpest annual drop in pending sales at 31.6%, followed by Atlanta at 25.9%, San Diego at 25.3%, Las Vegas at 22.7% and Denver at 22.3%.

The broad slowdown underscores the strain on residential real estate as buyers grapple with monthly costs that remain historically high relative to household budgets.

Sellers Face More Pressure as Inventory Grows

Housing supply keeps building, even as new listings soften. Newly listed homes fell 0.6% from the previous week to 352,421, the lowest level since January, and were down 4% from a year earlier.

Even with fewer owners listing homes, total active inventory rose 0.3% week over week to about 1.51 million homes, an increase of 2.2% from a year earlier.

This gap shows that homes are entering the market faster than buyers are absorbing them. National housing supply reached 4.5 months, up from four months a year earlier. A level between four and five months is generally considered balanced.

Sellers are increasingly cutting asking prices in response to slower demand. About 21.5% of active listings had at least one price reduction, compared with 20.9% a year earlier. The median time a home stayed on the market also rose to 50 days, one day longer than a year ago.

Only 27.5% of homes went under contract within two weeks of listing, down from 28.5% a year earlier.

Overall, the figures point to stronger competition for sellers and longer marketing periods, even though inventory remains below many historical supply levels.

Regional Markets Continue to Move in Different Directions

National price declines are hiding sharp differences across metro areas.

San Francisco saw the largest annual home-sale price increase among the 50 biggest metropolitan markets, with prices up 15%. Other sizable gains were recorded in New Brunswick, New Jersey, at 8.4%; Pittsburgh at 7.4%; Montgomery County, Pennsylvania, at 6.2%; and Cleveland at 4.9%.

On the other hand, Seattle experienced the biggest decline, with median sale prices down 5.1% from a year earlier. San Jose fell 4.9%, Austin dropped 4.6%, Kansas City decreased 4.3%, and Nashville posted a 3.3% decline.

Those regional gaps reflect the influence of local supply conditions, job trends and affordability pressures on home values across the country.

A Housing Market at a Turning Point

The latest data suggest the housing market is adjusting in a meaningful way. For buyers, slower price growth and rising inventory may eventually improve conditions. Still, record-high monthly mortgage payments remain a major barrier.

For homeowners who want to sell, softer demand, longer listing times and more frequent price cuts point to the need for realistic pricing.

More broadly, falling prices alone may not be enough to revive the market. Until borrowing costs and overall homeownership expenses become more manageable, many buyers are likely to stay on the sidelines.

Redfin’s latest findings indicate that the market is entering a new phase in which affordability, not just supply, will increasingly shape the direction of residential real estate.