Apart from the early months of the pandemic, September 2022 has brought the biggest slump on record for both home sales and listings. 

According to a new Redfin report, home sales dropped 25% compared to a year ago, while listings fell 22%—the steepest annual declines since May 2020 and April 2020, respectively. 

Redfin graph

Source: Redfin

Here’s what you need to know. 

Buyers and sellers backpedaling out of deals

With mortgage rates at their highest level in two decades—driving up monthly mortgages by more than 50%, it’s no surprise many buyers and sellers are backing out of sales. 

Homebuyers are looking at monthly housing payments over 50% higher than they would have paid a year ago. Even those not priced out of the market must adjust their expectations when shopping for a new home. 

Meanwhile, homeowners with lower mortgage rates locked down have less incentive to sell their current homes and upgrade to something that will set them back hundreds more per month—especially with inflation driving up other costs. 

Because of this, around 60,000 home purchase agreements fell through in September—about 17% of the homes that went under contract that month. Except for March 2020, that is the highest percentage on record. 

Per Redfin’s report, 46% of offers submitted by Redfin agents in September faced competition—the lowest share since the beginning of the pandemic. 


Source: Redfin

The U.S. housing market is at another standstill, but the driving forces are completely different from those that triggered the standstill at the start of the pandemic. This time, demand is slumping due to surging mortgage rates, but prices are being propped up by inflation and a drop in the number of people putting their homes up for sale. Many Americans are staying put because they already relocated and scored a rock-bottom mortgage rate during the pandemic, so they have little incentive to move today.

Chen Zhao

Redfin Economics Research Lead

Pricey, high-growh metros see the steepest price drops

The biggest drops in home prices are happening in expensive and high-growth metros on the West Coast and in Mountain states:

  • Austin: -8.2%
  • San Francisco: -7.9%
  • Salt Lake City: -6.8%

Of the 100 largest metros, the 17 with the biggest home price declines from their peak levels are in the West. 

That said, homeowners in these metros should still have more than enough equity to weather these price drops, thanks to home value appreciation since 2019—ranging from San Francisco’s 26% to Austin’s 65%. 

U.S. metros with the highest growth in home prices: 

  • El Paso, TX: 23%
  • West Palm Beach, FL: 22.2%
  • Greenville, SC: 19.3%
  • Miami: 17.6%
  • Greensboro, NC: 17.5%

Newly pending and new for-sale listings are down

The number of newly pending listings for September was down 18% month-over-month—and down 29.3% compared to a year ago. That drop is partly due to the dramatic slowdown in activity at the end of September when mortgage rates reached 7%. 


Source: Zillow

Sales for September 2022 are down more than 6% compared to September 2019. Volatile mortgage rates have not only made moving more expensive, but they’ve also made it difficult for buyers and sellers alike to plan for the future. 

New for-sale listings saw an 11.4% drop month-over-month, making September the third straight month of double-digit declines. While it’s normal for new listings to decline at this time of year, the drop from this year’s springtime peak is steeper than in 2019. 

That drop in new listings—combined with the downward trend of homebuilder sentiment—could insulate the housing market from the price-dampening effect of cooling buyer demand. 

Existing home sales, prices, and inventory

According to the National Association of REALTORS® (NAR), existing home sales declined for the eighth month to a seasonally-adjusted annual rate of 4.71 million, dropping 1.5% month-over-month and 23.8% year-over-year. 

The median sale price for existing homes rose to $384,800, up 8.4% year-over-year. 

As for inventory, the number of unsold existing homes dropped for the second straight month to 1.25 million—equivalent to 3.2 months’ supply at the current sales rate—by September 30th. 

Longer days on market

While total housing inventory is 3% higher than a year ago, it’s still 38% below 2019 levels. 


Source: Zillow

With the decline in new listings, that increase in total inventory is mainly due to listings spending more time on the market. 

Median time went up from August to 19 days on market—longer than last year’s 11 days but much shorter than in September 2019, when homes on the market typically waited 30 days before the seller accepted an offer. 

Less competition and more price cuts

Homebuyers who haven’t been priced out of the market are seeing far less competition for listings, which means they have more time for careful decision-making and more leverage in negotiations, along with reduced odds of a bidding war driving prices up. 

In fact, the share of listings with a price cut is now at 27.5% — up from 18.3% a year ago and 22.3% in September 2019. 

Of the top 100 largest U.S. metros, the following had the biggest share of price cuts:

  • Boise: 47.8%
  • Phoenix: 45%
  • Ogden, UT: 44.4%
  • Salt Lake City: 43.9%

A larger share of renters’ income goes to housing

According to Zillow’s rent index, the typical U.S. rent is at $2,084 — up 10.8% year-over-year but down 17.2% from its record-breaking peak in February. Rent declined month-over-month by a modest 0.3% — much lower than the peak rate of 2.2% in July 2021. 


Source: Zillow

While rent growth has slowed, rapid surges throughout the pandemic have increased the share of renters’ income that goes toward housing—from 29% in September 2019 to today’s 35%. 

When housing costs consume more than 30% of household income, it becomes burdensome, leaving less to save or to spend on other necessities. 

There’s a strong correlation between a typical renter spending more than 32% of income on rent with an accelerated increase in homelessness. 

Metros where rents have risen the most since 2019:

  • Miami: 51.5%
  • Tampa: 49.1%
  • Phoenix: 43.8%

Housing market likely to get worse

According to housing market experts and some big names in the real estate industry, the U.S. housing market will probably get worse before it gets better. 

The housing market is going to get worse before it gets better. With inflation still rampant, the Federal Reserve will likely continue hiking interest rates. That means we may not see high mortgage rates—the primary killer of housing demand—decline until early to mid-2023.

Chen Zhao

Redfin Economics Research Lead

That said, the best agents will take this as an opportunity to outperform other agents in the field, turning the challenges of this market to their advantage—and that of their clients.