Home sellers cut prices as mortgage rates reach 7.40%

Home shoppers are encountering more price reductions, but borrowing remains costly. Over the four weeks through October 11, the nationwide median list price slipped 0.3% from a year earlier. It was the first yearly drop since March. Redfin’s data also showed markdowns on 22% of homes for sale, a record share and an increase from 20.9% one year before.

On October 8, the average rate for a 30-year fixed loan was 7.40%. That was a three-year peak, up from 7.28% the previous week and 6.30% a year earlier. The typical monthly mortgage bill reached a record $2,777. Meanwhile, the median selling price still gained 0.5% annually, its weakest increase since March.

Demand showed little improvement. Contracts awaiting completion rose 1.5% from the prior week but remained close to the bottom of Redfin’s records going back to 2021. Every one of the 50 largest US metro areas recorded an annual decline. Available homes continued to accumulate: new listings added 0.4% for the week, overall inventory grew 0.8%, and supply reached 4.2 months. Fannie Mae projects a 7.5% average for 30-year fixed mortgages throughout 2027, while the Mortgage Bankers Association expects rates to stay above 7% that year.