US home sellers are cutting prices at a record rate as the mortgage market confronts demand near historic lows
A critical pressure point has emerged in the US housing market. The median asking price for a home fell 0.3% year over year in the four weeks ending October 11, marking the first annual decline since March, according to new data from Redfin.
The reading arrives as mortgage rates hit a three-year high and buyer demand languishes near record lows, a combination that gives mortgage brokers limited room to maneuver on purchase volume.
Sellers start to blink
The share of active listings carrying a price reduction reached 22% in the period ending October 11, the highest in Redfin’s records, up from 20.9% a year earlier. That trend reflects sellers adjusting to a buyer pool steadily thinned by sustained affordability pressure.
The 30-year fixed-rate mortgage averaged 7.40% for the week ending October 8, its highest level since November 16, 2023. The benchmark climbed 12 basis points from 7.28% the prior week and is up sharply from 6.30% a year ago.
Such marginal movements do little to relieve a $2,777 median monthly mortgage payment, a figure Redfin identifies as a record high, driven by elevated rates and still-rising home prices.
The median US home-sale price rose 0.5% year over year, the slowest growth rate since March.
Elevated rates are expected to remain a drag on origination volumes through the end of 2026, with only modest price relief anticipated until conditions shift materially.
Moreover, Fannie Mae no longer sees meaningful mortgage rate relief on the horizon. The mortgage giant now expects the average 30-year fixed mortgage rate to hold at 7.5% through all of 2027.
Mike Fratantoni, Joel Kan, and Marina Walsh of the Mortgage Bankers Association expect mortgage originations to fall in 2027, with rates remaining above 7% and refinance opportunities staying limited despite steady purchase activity. https://t.co/3WmwWuhSWh
— Mortgage Professional America Magazine (@MPAMagazineUS) October 13, 2026
Speaking to Mortgage Professional America in June, Amir Nurani, broker-owner at Left Coast Leaders in California, said: “I will come out on record and tell you that rates at the end of this year will be higher than they are today. I think that we could absolutely touch 7% again.”
Rates have since surpassed that mark.
Nurani had also warned that buyers who kept waiting would eventually find themselves with fewer options.
“The fear of loss is a far better motivator than the possibility of gain,” he told MPA.
“The whole notion of rates coming down guaranteed has come off the table. And I think it’s created some acceleration in some homebuyers going, ‘Hey, let’s just buy something now before rates go up even further.’”
Demand at a critical low
Pending home sales — contracts signed but not yet closed — ticked up just 1.5% week over week in the period, but remain near their lowest level in records dating to 2021, including the late-2023 period when rates were nearing 8%.
On an annual basis, pending transactions posted declines across every one of the 50 most populous US metro areas, the first across-the-board contraction of that kind in three years, according to Redfin.
Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), recently told MPA that the market had fundamentally shifted since the start of the year.
“We started 2026 with mortgage rates briefly below 6%, and saw just how much of an impact that had on both refinance and purchase volume,” he said.
“It really, really caught folks’ attention. Because I think now most buyers in the market, they recognize that a low 6% or below 6% is a very good rate. Seven percent is not a good rate, but they’re not looking for a 3% rate anymore. That’s where we started the year. The Middle East conflict is absolutely the variable that really threw our forecast off.”
The MBA now expects the Federal Reserve to raise rates in December and again in the first quarter of 2027, with 30-year fixed rates remaining above 7% through all of next year.
Desmond P. Smith, EVP and chief growth officer at United Wholesale Mortgage (UWM), told MPA the current conditions will separate committed originators from those treating the business as a short-term pursuit.
“Rates are what they are. So you either get to create your own reality, which probably means you’ve got to work harder. You’re probably going to work harder and make less. You’re going to have to work harder and maybe not do as much, but if you keep the activity, you will be fine. And you will earn customers and clients.”
Supply is gradually expanding, with new listings up 0.4% week over week and total active inventory rising 0.8%.
Months of supply reached 4.2, nearing the 4-to-5-month range generally considered balanced. Whether that inventory build translates into real activity will be a defining question as brokers assess what could drive a meaningful US mortgage market recovery by year’s end.
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