BAM Key Details:

  • Housing market updates from Zillow and Redfin show a decline in home values from August to September, an uptick in annual price growth, and a slight increase in active listings as elevated mortgage rates drive buyers away from the market.

New reports from Zillow and Redfin show a monthly decline in home values, an increase in annual price growth, and an uptick in active listings. 

Yet even with inventory trending in the right direction, buyers are backing away from the market as mortgage rates sit above 7.5%. 

Still, the recent drop from 7.81% could encourage prospective homebuyers to take advantage of the slight improvement in buyer conditions. 

Despite last week’s hotter-than-expected jobs report, rates have fallen after the Fed signaled this week that it is unlikely to hike interest rates again and war broke out in Israel. Buyers should also remember that the average mortgage rate in the news is just that: an average. Many buyers can secure a lower rate by shopping around; the difference between rates among lenders is bigger when rates are higher. Buying down a mortgage rate is always an option, too.

Chen Zhao

Redfin Economic Research Lead

Zillow’s housing market update highlights changes from August to September, while Redfin’s report focuses on data for October. 

Here’s what you need to know. 

Home values see month-over-month decline, but annual price growth is up

Zillow’s market update shows a 0.1% decline in the typical U.S. home value from August to September, 2023. It’s the first month-over-month drop since February. 

Annual price growth for September was more positive, showing a 2.1% gain over September 2022, compared to August’s 1.3% annual growth. 

The divergence between monthly and annual price trends is mainly due to home prices falling more sharply this time last year compared to now.


Source: Zillow

At the metro level, home prices rose month-over-month in 14 of the 50 largest U.S. metros in September—down from 32 in August. 

The five metros with the largest monthly gains in home values: 

  1. San Diego (0.8%)
  2. Miami (0.5%)
  3. Hartford (0.3%)
  4. Los Angeles (0.3%)
  5. San Jose (0.3%)

Home values declined month-over-month in 32 major U.S. metros—up from 12 in August. The five metros with the biggest monthly declines in home values:

  1. Austin (-1.4%)
  2. New Orleans (-1.4%)
  3. San Antonio (-0.9%)
  4. Portland (-0.6%)
  5. Minneapolis (-0.6%)

Home values increased year-over-year in over half (31) of the 50 largest U.S. metros, with the highest annual gains in— 

  1. Hartford (11.1%)
  2. Milwaukee (8.5%)
  3. Providence (6.4%)
  4. Virginia Beach (6.2%)
  5. Philadelphia (6.1%)

Home values fell year-over-year in 18 major U.S. metros, with the largest declines in— 

  1. Austin (-10.0%)
  2. New Orleans (-8.8%)
  3. Las Vegas (-4.3%)
  4. Phoenix (-4.2%) 
  5. San Antonio (-2.5%)

Source: Zillow

Redfin’s report highlighted the following home value indicators for October, 2023:

Median sale price is $370,000 — up 2.7% year over year, partly because higher mortgage rates were slowing price growth this time last year


Source: Redfin

Median asking price is at $388,223 — up 5.2% year over year and marking the biggest increase in a year.


Source: Redfin

Median monthly mortgage payment is $2,736 at a 7.49% mortgage rate — up 10% year over year and just under the all-time high set one week earlier


Source: Redfin

Slight monthly increase in inventory—and an improvement in annual decline

From August to September, new listings fell 6.4%. Year over year, they fell 9.3%, compared to August’s annual decline of 12.7%. 

Total active inventory in September was up 0.2% from August. And, at 10.2%, September’s annual decline in active listings was smaller than August’s 13.8%. 

So, while housing options are still limited, inventory on the whole is trending in a positive direction. And if current trends continue, we could see year-over-year gains in new listings as early as this coming winter. 

This year’s peak for inventory is likely close, if we haven’t already reached it. 


Source: Zillow

Redfin’s report includes the following inventory updates for October, 2023:

New listings are at 81,964 — down 3.9% year over year and marking the smallest decline since July 2022, partly because new listings declined rapidly at this time in 2022.


Source: Redfin

Active listings are at 827,406 — down 14% year over year and tied with the previous week for the smallest annual decline in four months


Source: Redfin

Months of supply are up 0.2% to 3.2 months — compared to 4 to 5 months of supply, which is considered balanced; lower numbers point to a seller’s market.


Source: Redfin

Sales activity slows, with fewer homes selling above list price

According to Zillow’s report, closed sales data from August showed a drop in the number of homes selling above list price: 37.7% versus July’s 40.2%. 

On top of that, listing data for September shows a continued increase in the share of listings with price drops—up to 23.9% from August’s 23.4%. 

Listings in September also took 15 days to go pending, which is up from August’s 13 days but down from 17 days a year ago, matching August’s two-day annual decline. 

Sales activity also slowed, though this year’s seasonal decline was milder than last year’s. 

Newly pending listings fell 13% from August to September, after a 1.2% monthly decline in August. Year over year, they were down 14.8% in September, compared to an 18.9% annual decline in August. 


Source: Zillow

Redfin’s report shares the following sales activity indicators for October: 

  • Share of homes off market in two weeks is at 39.5% — up from 36% one year ago
  • Median days on market are at 32 — down two days compared to a year ago
  • Share of homes sold above list price is at 30.7% — up from 30% a year ago
  • Share of homes with a price drop is 6.8% — up  0.2 percentage points and reaching the highest level in a year.
  • Average sale-to-list price ratio is 99.3% — up 0.3 percentage points from a year ago

Meanwhile, rents are still slowly rising

From the looks of it, rental market trends are stabilizing, with September continuing the typical seasonal trend of slower rent growth in the second half of the year. 

Asking rents rose 0.2% from August to September—a small but notable increase from the pre-pandemic average for these months, when rent growth typically goes flat. 

It’s similar, though, to last September’s rate of rent growth. And it’s much slower compared to September 2021. The typical U.S. rent is now only 3.2% higher than it was a year ago, marking a slower annual growth rate compared to 2019 (4% full-year rent growth) or 2018 (4.2%).


Source: Zillow

Takeaways for real estate agents

Home prices trending downward month over month is good news for buyers who can afford to re-enter the market, especially if they can pay in cash. The difference in sale price may be minimal, but with rates hovering above 7.5%, buyers are still less likely to face stiff competition for a home they want. And with listings also up, they’ll have more options to choose from. 

That said, with home prices still trending upward year over year, sellers still have a decent shot at getting the price they want for a home. But with price drops on the rise, they’ll want to keep buyers’ budgets in mind when pricing their homes.