Falling mortgage rates and the Fed’s recent rate cut are invigorating the fall housing market, leading to a surge in new listings.

A Surge in New Listings

A recent report from Realtor.com® reveals that in September, there were 11.6% more homes newly listed on the market compared to the same period last year. This marks a three-year high, driven by declining mortgage rates and the Fed’s 50 basis point rate cut. After years of a “locked-in” market, where high rates deterred buyers and made homeowners reluctant to sell, there is finally movement. With more rate cuts anticipated this year, both buyers and sellers are gaining confidence in re-entering the market.

“We find that the lock-in effect is easing,” notes Realtor.com economist Ralph McLaughlin. “It’s likely that some sidelined buyers are coming back onto the field as both their buying power and home choices increase.” This shift suggests that a buyer’s market might be on the horizon.

Market Dynamics

McLaughlin’s research indicates that there were 34% more homes for sale on a typical September day this year compared to last, the highest number of active listings since April 2020. The surge in fresh listings is most pronounced in more expensive markets, where the nominal savings from lower mortgage rates are highest.

Seattle (+41.8%), Washington, DC (+30.4%), and San Jose, CA (+27.1%) are among the metros with the largest growth in newly listed homes compared to a year ago. McLaughlin explains, “We find a strong correlation between the median-priced home in a market and the growth in newly listed homes compared to last year.” This trend is partly due to homebuyers—who are often also home sellers—in more expensive markets benefiting from higher nominal savings than buyers in less expensive markets.

Regional Insights

While the number of listings is up in every region, the South saw the greatest increase year-over-year. Compared to last September, the South experienced a 42% increase in listings, the West saw a 36.5% increase, the Midwest saw a 22.3% increase, and the Northeast gained 14.8%. Cities across Florida, including Tampa, Miami, and Jacksonville, saw the most significant booms in listing levels, with increases of 74%, 67.9%, and 61.9% year-over-year, respectively.

Despite these improvements, listing levels still lag behind pre-pandemic figures. “While inventory this September certainly continues to improve, it is still down 23.2% compared with typical 2017 to 2019 levels,” says McLaughlin.

Price Trends

The median price of homes for sale in September decreased by nearly $5,000 from August, dropping from $429,500 to $425,000. However, the median price per square foot grew by 2.3%, indicating that buyers are getting less space for their money. To put it into perspective, per-square-foot prices have increased by a staggering 50.8% compared to September 2019.

Overall, prices increased by 2.8% in the Northeast and 0.6% in the Midwest, while they decreased by 0.2% in the West and 2.3% in the South. Among the 50 largest metros, Rochester, NY (+13%), Milwaukee (+11.4%), and Cleveland (+9.3%) saw the biggest price increases year-over-year. Conversely, Miami (-12.4%), Cincinnati (-9.5%), and San Francisco (-8.9%) experienced the largest median price drops.

Additionally, more sellers are offering price cuts on their listings. Around one-fifth of all listings (18.4%) offered cuts, a half percentage point more than this time last year.

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