U.S. home-sale prices have declined for the first time in more than three years, marking a significant shift in the housing market as elevated mortgage costs, weakening buyer demand and growing inventory put increasing pressure on residential real estate. The median U.S. home-sale price fell 0.1% year over year to $389,601 during the four weeks ending October 25, according to a new housing market report from Redfin.
The decline follows three consecutive years of annual price increases and represents the second straight week that home-sale prices have moved lower. Prices fell 0.2% in the previous reporting period, suggesting that the market’s prolonged appreciation cycle is losing momentum.
The slowdown comes as prospective buyers face some of the most expensive homeownership conditions on record. Although mortgage rates have eased slightly from recent highs, the combination of elevated financing costs and still-high property values continues to weigh on affordability and discourage purchasing activity.
Redfin’s latest analysis, published October 29, found that the typical homebuyer’s monthly mortgage payment reached $2,786, an increase of 10.7% from a year earlier. That figure represents the second-highest level in the company’s records, surpassed only by the previous week’s reading.
The weekly average mortgage rate stood at 7.32%, down from 7.4% a week earlier but remaining near a three-year high.
Homebuying Demand Reaches Record Low
The affordability squeeze is translating into a sustained decline in housing transactions. Pending home sales fell 1.8% week over week to 276,352, the lowest level in Redfin’s records dating back to 2021. On a year-over-year basis, pending sales were down 15.9%.
Notably, pending sales declined across all 50 of the most populous metropolitan areas analyzed by Redfin for the third consecutive week, indicating that weakening demand extends across virtually every major U.S. housing market.
Seattle recorded the steepest annual decline 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 widespread slowdown highlights the challenges facing the residential real estate industry as prospective buyers contend with monthly ownership costs that remain historically expensive relative to household purchasing power.
Sellers Adjust Expectations as Inventory Builds
Housing supply continues to expand, although new listings are also showing signs of weakness. The number of newly listed homes declined 0.6% from the previous week to 352,421, the lowest level since January. New listings were down 4% year over year.
Despite fewer homeowners bringing properties to market, total active inventory increased 0.3% week over week to approximately 1.51 million homes, up 2.2% from a year earlier.
The divergence reflects the fact that homes are entering the market faster than buyers are purchasing them. National housing supply reached 4.5 months, up from four months a year earlier. A supply level of four to five months is generally considered a balanced market.
Sellers are increasingly responding to slower demand by reducing their asking prices. Approximately 21.5% of active home listings had experienced a price reduction, compared with 20.9% a year earlier. Meanwhile, the median time a property remained on the market increased to 50 days, one day longer than the previous year.
Only 27.5% of homes went under contract within two weeks of being listed, down from 28.5% a year earlier.
These indicators suggest that sellers are facing greater competition and longer marketing periods, even as available inventory remains relatively constrained compared with historical housing supply levels.
Regional Markets Show Diverging Price Trends
National price declines are masking substantial differences among metropolitan housing markets.
San Francisco recorded the strongest annual home-sale price appreciation among the 50 major metropolitan areas, with prices increasing 15%. Other markets posting significant gains included New Brunswick, New Jersey, at 8.4%; Pittsburgh at 7.4%; Montgomery County, Pennsylvania, at 6.2%; and Cleveland at 4.9%.
Conversely, Seattle experienced the largest price decline, with median sale prices falling 5.1% year over year. San Jose declined 4.9%, Austin fell 4.6%, Kansas City decreased 4.3%, and Nashville recorded a 3.3% decline.
The regional differences underscore how local supply conditions, employment trends and housing affordability continue to shape property values across the country.
Housing Market Faces a Critical Turning Point
The latest figures point to a housing market undergoing a meaningful adjustment. For prospective purchasers, slowing price growth and increasing inventory could eventually create more favorable buying conditions. However, the record-high monthly mortgage burden remains a substantial obstacle.
For homeowners considering selling, the combination of weaker demand, longer marketing periods and increased price reductions signals the importance of realistic pricing strategies.
The broader challenge for the U.S. housing industry is that declining prices alone may not be enough to restore market activity. Until financing costs and overall homeownership expenses become more manageable, many prospective buyers are likely to remain on the sidelines.
Redfin’s October findings suggest that the market is entering a new phase in which affordability, rather than simply the availability of homes, will play an increasingly decisive role in determining the direction of residential real estate.
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