Housing Market Slows Again as High Mortgage Rates Weigh on Buyers

As we head into the fall housing market, buyers and sellers are facing another shift in conditions. Mortgage rates remain elevated, home sales are slowing, and more inventory is giving buyers greater negotiating power. At the same time, home values are proving resilient, creating a market that looks very different depending on where you live and what you are trying to accomplish.

At Nuvision, we continue to track the trends that matter most to our members. This month, the data points to a slower housing market, but also one with more opportunities for buyers who are prepared, realistic sellers, and homeowners weighing their next move.

Steven Thomas: Orange County Enters the Fall Market

According to Steven Thomas of Reports on Housing, Orange County has entered its traditional fall slowdown. Active inventory recently declined to 4,982 homes, suggesting supply may have peaked in mid-August. Inventory is only 2% above last year and remains 32% below the 2017-2019 pre-pandemic average.

Buyer demand remains weak by historical standards. Orange County recorded 1,528 pending sales, nearly unchanged from two weeks earlier, but far below the pre-pandemic average of 2,438. The Expected Market Time currently stands at 98 days, compared with 94 days last year and 82 days before the pandemic.

Thomas says the market is leaning slightly toward buyers, but that does not mean major discounts are available. Most sellers still have equity and are not under pressure to sell. Distressed properties account for just 0.2% of active listings, while 99.9% of July sales involved sellers with equity.

The luxury market has been stronger. Demand for homes priced above $2.5 million is up 44% from a year ago, while the Expected Market Time has improved to 144 days-- its strongest reading of 2026.

Zillow: Housing Recovery Back on Pause

Zillow now expects its measure of existing home sales to decline 3.5% year-over - year during the fourth quarter, even though total 2026 sales are still projected to finish 1.2% above last year. The primary problem remains mortgage rates, which have moved from around 6% in the spring toward the upper end of the 6%-7% range.

That has already slowed the market. August home sales fell 0.6% from a year earlier and 10.7% from July, while newly pending listings declined 2.6% year-over-year. Zillow has raised its year-end mortgage rate forecast to roughly 6.7%.

Home values have held up despite weaker sales. The typical U.S. home was valued at $369,678 in August, up 1.3% from a year earlier. Inventory reached 1.41 million homes, up 3%, while 26.3% of listings had received a price cut.

Renters are also seeing renewed pressure. Typical rent reached $1,948 in August, up 2.5% from last year. Zillow now expects fourth-quarter multi-family rent growth of 2.1%, suggesting some would-be buyers are staying in the rental market because of higher mortgage costs.

Redfin: Buyers Gain More Negotiating Power

Redfin says buyers are gaining more leverage as fewer shoppers compete for a growing number of homes. Seller concessions were included in 44.7% of U.S. home sales in August, up from 42.6% last year and the highest August level in Redfin records dating back to 2020.

Some buyers are getting both concessions and lower prices. Redfin reported that 15.8% of August sales included a seller concession and a price reduction. Pending sales also fell to their lowest level in nearly three years during the four week span ending September 13.

Prices, however, remain relatively stable. The median home-sale price was about 2% higher than a year ago, and 25.1% of homes still sold above asking price. Buyers have more room to negotiate, but well-priced homes can still attract competition.

California dominated the upper end of the market in August. Six of the 10 most expensive U.S. sales were in California, including four in the Bay Area and two in Orange County, with a one estate topping the list at $70 million.

NAR: Sales Slip as Inventory Improves

The National Association of Realtors reported that existing home sales declined 2% in August. Sales were flat in the West, and fell in the Northeast, Midwest and South. Even with the monthly decline, sales were still up 1.6% through the first eight months of 2026.

Inventory continues to improve. The market now has about 4.9 months of housing supply at the current sales pace, the highest level in more than a decade. That is giving buyers more choices and more room to negotiate.

Pending sales increased 0.3% month-over-month in August, but remained below last year. NAR says contract signings are still roughly 30% below the levels seen in the years before the pandemic.

NAR Chief Economist Lawrence Yun says wage and job growth continue to support demand, but elevated mortgage rates are off-setting much of that additional buying power.

Key Housing Market Takeaways

• Zillow expects existing-home sales to decline 3.5% year over year in the fourth quarter, although total 2026 sales are still forecast to finish 1.2% higher than last year.
• Mortgage rates have moved from around 6% in the spring toward the upper end of the 6%-7% range, with Zillow forecasting rates at around 6.7% by year-end.
• National housing inventory continues to improve, giving buyers more choices and more negotiating leverage.
• Nearly 45% of U.S. home sales tracked by Redfin included a seller concession in August, the highest August share in Redfin records going back to 2020.
• Orange County inventory appears to have peaked for the year, while buyer demand remains well below pre-pandemic levels.
• Home prices continue to hold up nationally, with Zillow reporting the typical U.S. home value at $369,678, up 1.3% from a year ago.
• The rental market is strengthening, as would-be buyers remain sidelined, with nationwide rents up 2.5% from a year ago.

What This Means for Buyers and Sellers

The September housing data points to a slower market with more buyer leverage, but not a broad decline in home values. Buyers have more inventory, more time, and greater negotiating power, while sellers need to price more carefully.

For Nuvision members considering buying, selling or refinancing a home, understanding the full monthly housing cost remains critical. With rates still elevated, financing strategy can matter just as much as the price of the home.