September 2025 Housing Market Report: A Market in Limbo

At Nuvision Credit Union, we know that understanding the housing market is a big part of feeling confident about your financial future. That’s why each month we pull together insights from leading experts like Zillow, Redfin, the National Association of Realtors, and analyst Steven Thomas.

September’s numbers show a market that’s slowing in some areas, while staying competitive in others. Sellers are pulling back, buyers are hesitating, and builders are cautious — but lower rates and rising wages are creating some bright spots. Here’s a closer look at what’s happening and what it could mean for you.

Sellers Pull Back and Builders Slow Amid Rate Cuts

The housing market lost momentum in August, as sellers stepped back and new listings dropped to the lowest level on record for that month. Zillow reports that fresh listings fell 7.3% from July, shrinking overall inventory by 1.3%. Still, supply remains up 15% compared to a year ago, meaning buyers have more homes to choose from than last year, but fewer new ones are hitting the market.

Homes are also taking longer to sell, averaging 27 days on the market—about a week slower than last year, and returning to pre-pandemic norms. Price growth has stalled, with home values flat year-over-year at the slowest pace since 2018. It seems potential sellers are content to hold on to low mortgage rates and the significant equity they’ve built since 2020. This, combined with a softer job market, has slowed the flow of new homes to a trickle.

At the same time, new construction is cooling. Housing starts fell 8.5% in August, and permits dropped more than 11% from a year ago, showing builder hesitation. Rising costs, sluggish sales, and weaker-than-expected demand have weighed on confidence. Many projects are on hold as builders wait to see if affordability improves. Still, there are small signs of optimism. Mortgage rates have eased since May, and builder expectations for future sales recently hit a six-month high. Zillow data shows the median price per square foot for new homes was down 1.2% in July, reflecting both cooling demand and price pressure.

The Federal Reserve’s recent quarter-point rate cut added another layer. Mortgage rates slipped to about 6.25%, their lowest in months, giving buyers slightly more breathing room. But analysts warn not to expect a steep drop. The Fed has signaled it plans to cut rates slowly over the next few years, aiming for a federal funds rate in the 3.25–3.5% range by 2027. While lower borrowing costs may encourage some buyers and builders, sellers remain unmoved, as evidenced by August’s record-low new listings.

Regionally, the market remains uneven. Former hot spots in the South, such as Miami, Tampa, Jacksonville, and Austin, now tilt toward buyers as inventory rises. Seattle has also shifted into buyer-friendly territory. Meanwhile, supply shortages keep the Northeast and Bay Area firmly in sellers’ favor, with cities like Boston, Buffalo, Hartford, San Francisco, and San Jose remaining some of the most competitive markets in the country. This proves that local dynamics continue to outweigh national trends.

Buyers Hesitate as Prices Edge Higher Despite Rate Relief

Redfin’s latest report highlights a market caught in limbo. Pending sales are up just 0.8% year-over-year, showing how hesitant buyers remain even with mortgage rates at their lowest levels in nearly a year. At the same time, prices continue to climb. The median U.S. home-sale price rose 2.2% in September, the sharpest increase in five months, as tight supply keeps upward pressure on values. With mortgage rates now around 6.35%, affordability has improved slightly, but many buyers are waiting for even deeper cuts.

That wait-and-see approach carries risks. Redfin agents warn that if rates fall further, demand could surge quickly, competition would return, and prices would rise more sharply. In that scenario, buyers might find themselves paying more each month, even with a lower interest rate. For now, buyers who are ready to act have more leverage. Homes that aren’t priced or presented well are sitting longer, and many sellers are more willing to offer concessions to get deals done.

Another encouraging trend comes from the broader economy: wages are finally outpacing housing costs. Redfin notes that incomes are up 4.1% year-over-year, compared to 2.6% growth in rents and virtually flat mortgage payments. That’s a reversal from the pandemic years, when housing costs soared far faster than paychecks. This gives buyers and renters a bit more breathing room, even if the affordability gap hasn’t disappeared.

New Law Protects Homebuyers’ Privacy

September also brought a major policy shift that could reshape the buying process. President Trump signed the Homebuyers Privacy Protection Act into law, legislation strongly supported by the National Association of Realtors. The act bans the sale of "trigger leads," a practice where lenders purchase consumer data the moment someone applies for a mortgage. For years, that data-sharing led to homebuyers being bombarded with calls, texts, and emails from competing lenders almost immediately after pulling their credit.

NAR hailed the law as a win for consumer privacy, transparency, and trust. While the new law won’t move the needle on inventory or prices, it directly improves the buying experience and gives homebuyers more control over their personal information.

Lower Rates Could Slowly Build Market Endurance

Housing analyst Steven Thomas compared today’s market to training for a marathon. Mortgage rates have gradually declined from just over 7% earlier this year to around 6.25% now, giving buyers some relief. But like a runner building endurance mile by mile, the market won’t shift overnight. The steady improvement in affordability may slowly bring more buyers back, but Thomas stresses that the adjustment will take time. The path forward is likely to be gradual, with steady progress rather than sudden change.

Key Takeaways

• New listings dropped 7.3% in August, the lowest on record for that month, tightening inventory.
• Housing starts fell 8.5%, and permits declined more than 11% year-over-year, showing builder caution.
• Mortgage rates dipped to ~6.25%, improving affordability slightly, though sellers remain reluctant to list.
• Pending sales rose just 0.8%, as buyers hesitate, even while prices climbed 2.2% year-over-year.
• Wages grew 4.1%, outpacing both rents and mortgage payments for the first time in years.
• A new federal privacy law bans trigger leads, protecting buyers from aggressive lender marketing.

September’s numbers point to a housing market that’s still finding its footing. Sellers are cautious, buyers are weighing their options, and builders are holding back. At the same time, lower mortgage rates and stronger wage growth are starting to open new opportunities.

At Nuvision, we share these monthly reports so our members can stay informed and make confident decisions. Whether you’re buying your first home, selling, or simply keeping an eye on the market, our team is here to help you plan for the life you’re building.