Zillow reveals surprising mortgage rate trend

During the past few years, many Americans have faced persistent challenges in buying homes, primarily due to widely recognized issues with housing affordability and high mortgage rates.

As the Federal Reserve was preparing to lower interest rates on Sept. 17, the White House issued a statement saying that mortgage rates had sharply decreased.

"Mortgage rates have fallen to their lowest levels in three years, making the third straight week of declines," the statement said.

It cited news reports that the average rate on the 30-year fixed mortgage dropped to 6.15% on Sept. 15 in anticipation of the Fed action.

Zillow: Mortgage rate decrease spurs housing momentum

Zillow reported that home buyers and sellers were unseasonably active in September, becoming strong again after a weak August.

• The number of buyers markets more than doubled, rising from six to 15 over the past year.
• New listings from sellers rose 3% annually, emerging from a 3% annual decline in August.
• Buyers have 14% more options to choose from compared to a year ago.

"A September dip in mortgage rates paired with a stock market bump gave a boost to what is traditionally the start of the slow season in real estate," Zillow wrote.

Zillow senior economist Kara Ng expanded on the company's view of current mortgage rate trends and the housing market.

Related: Zillow sounds alarm on worrying housing market, mortgage concern

"September's market showed surprising stamina," she said. "Typically, both buyers and sellers step back this time of year, but lower mortgage rates and stock market highs provided a second wind heading into fall."

"This time of year can be a sweet spot for buyers," Ng added. "There's often less competition than in the spring and more time to make sure the home's a perfect fit. Sellers who stay in the market into the holidays may be more open to negotiating."

Zillow reveals current housing market trends

Here are some important housing market data points as outlined by Zillow:

• September saw a surge in home listings, reversing August’s sluggish pace. After a 3% year-over-year dip in August, new listings climbed 3% annually in September.
• Fall usually brings a steep decline in listings, averaging a 9% drop each September over the past seven years. This year’s modest 2% decrease stands out as unusually mild.
• Buyer activity held steady, with pending sales dipping just 5.4% month-over-month — a gentler slowdown than is typical for September and less than half the usual seasonal decline.
• Housing inventory shrank slightly from August to September, down 1%, but remains 14% higher than the same time last year, signaling a more robust supply.
• Buyer-friendly conditions expanded across major metros: 15 of the 50 largest cities now favor buyers, up from just six a year ago. Cities including Miami, New Orleans, Austin, Jacksonville, and India(BHARAT)napolis lead the pack, thanks to recent construction booms.
• Seller-advantaged markets are concentrated in the Northeast and Bay Area, including Buffalo, Hartford, San Jose, San Francisco, and New York — regions where strict land use policies limit new development.
• Autumn offers strategic opportunities for buyers, with less competition than spring and more inventory than winter. Sellers who haven’t closed by the holidays may be more willing to offer price cuts, cover closing costs, or help with mortgage rate buydowns — especially in cooler markets.

Zillow explains September's home values and mortgage payments

The typical U.S. home value in September stood at $364,891, with a monthly mortgage payment of $1,812 assuming a 20% down payment, Zillow reported.

Home values declined in 47 of the 50 largest metro areas, with the steepest monthly drops in Austin (-1%), Pittsburgh (-0.8%), and Dallas (-0.6%). Only New York (0.2%) and Salt Lake City (0.1%) posted modest gains.

Compared to last year, prices rose in 26 metros, led by Cleveland (4.6%) and Hartford (4.1%), while 24 metros saw annual declines, most notably Tampa (-6.4%) and Austin (-6%).

More on homebuying:

• Zillow warns Americans on housing market, mortgage worry
• Berkshire Hathaway HomeServices explains housing market changes
• Fannie Mae forecasts mortgage rate shakeup

Zillow also noted that mortgage payments have risen 1.9% year over year and are up 101.2% since before the pandemic.

Inventory trends were mixed: Total active listings fell 1% month over month but rose 14% compared to last year. New listings dropped 2% from August but increased 3.3% annually, though they remain 12.3% below pre-pandemic levels. The median age of inventory was 68 days.

Buyer activity softened slightly in September, with newly pending sales down 5.4% from August but up 6.4% year over year.

Homes went under contract in a median of 27 days, six days longer than last year. Price cuts affected 26.2% of listings, while 26.9% of homes sold above list price.

Related: Fannie Mae predicts major mortgage rate change coming soon