The housing market for existing homes got slightly busier in September, with 1.5% more sales than the previous month, according to data from the National Association of Realtors (NAR). Lenders attribute the increase to last month’s interest rate reduction that spurred more attractive mortgage loans.
More homes were sold in the Northeast, South and West in September than in August. Sales in the Midwest fell from the previous month.
Comparing September 2025’s sales to September 2024, the Northeast, Midwest and South saw more homes sold this September than a year ago. The number of homes sold in the West didn’t really change from last year.
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Mortgage rate drop gave market a boost
According to Wells Fargo, when mortgage rates dropped in September, more people were able or willing to buy homes, giving the housing market a small boost. The average interest rate on a 30-year mortgage declined slightly — from 6.56% in late August to about 6.30% in September and October, making home loans cheaper for buyers.
Because rates dropped at the end of summer, more people applied for mortgages, up 7.7% compared to the previous month. That’s the highest number of applications since January 2023, according to Wells Fargo.
Another report from Freddie Mac released Thursday says the average rate on a 30-year fixed-rate mortgage fell to 6.19%, its lowest level in more than a year. The mortgage rate surpassed 7% at the start of 2025.
Inventory still tight despite slight increase
The number of single-family homes available for sale also increased in September, which is good for buyers. However, compared to September 2019, before the COVID-19 pandemic, there were still 15.6% fewer homes for sale, meaning supply is still tight overall. Even though inventory is still below pre-pandemic levels, it has been increasing each year.
Mortgage rates might drop even more, as the Federal Reserve is set to meet on Oct. 27. Even though rates might drop, Wells Fargo is not expecting a big change. They’re predicting that mortgage rates will mostly stay between 6.2% and 6.4% through the next couple of years.
Many current homeowners are locked into mortgages with much lower rates, like 3-4%, a few years ago. Mortgage rates lingering around 6.3% aren’t likely to entice homeowners to sell and buy a new house, since it would mean taking on a higher-rate loan. That hesitance will reduce the number of homes for sale and make it harder for the housing market to rebound strongly.
