Home Sellers Outnumber Buyers by 63% as Mortgage Rates Top 7%

A buyer's market built on missing buyers

In September, the U.S. housing market reached its widest gap between supply and demand in more than ten years. Redfin estimates there were 62.6% more home sellers than buyers that month, the largest gap in its records, which go back to 2013. The figure rose sharply from 56.9% in August, and it was the fourth straight month to set a new record.41

The raw counts explain the gap. Redfin estimated about 928,892 active buyers nationwide, the fewest in its dataset and the fifth monthly decline in a row. It counted about 1,510,784 sellers, the most since March 2020.4344 Some context on what these numbers are: Redfin counts sellers as active MLS listings. It estimates buyers from its own data on how long a buyer typically takes to go from a first tour to a closed purchase, combined with active listings and pending sales. Both figures are seasonally adjusted and may be revised.41 One trade outlet points out that the result is a modeled estimate of who is in the market. It is not a full count of shoppers, and it is not the same thing as listings divided by closed sales.46

The main point is that this imbalance comes from buyers leaving, not from a wave of new supply. Redfin senior economist Asad Khan called it "a buyer's market born out of caution, not strength."43 New listings rose only 0.3% from August while active inventory grew 1.2%. In other words, the backlog is building because homes are sitting unsold, not because owners are rushing to list.43 Redfin says the same thing directly: inventory is rising mostly because listings linger without finding buyers.41

Mortgage rates are the main cause

The timing points to borrowing costs. The Federal Reserve raised its benchmark rate by a quarter point on September 16, to a range of 3.75% to 4%. That was its first increase since July 2023. The 30-year fixed mortgage rate then rose above 7% in late September, up from an August average of 6.67%, according to Freddie Mac figures cited in a market summary.35 Freddie Mac's 30-year average reached 7.40% in mid-October, the highest in nearly three years.16 By October 22 it was 7.32%, compared with 6.19% a year earlier.19

Mortgage application data shows the same pullback. For the week ending October 2, the Mortgage Bankers Association's 30-year contract rate rose to 7.49%. Purchase applications fell across all loan types, with FHA purchase applications down the most at 6%. MBA deputy chief economist Joel Kan said the jump in borrowing costs had pushed many potential buyers out of the purchase market.1 Applications kept falling after that. Total volume dropped 5.3% in the week ending October 16, the seventh weekly decline in a row and the lowest level since January 2025. Purchase applications alone fell 7.3% that week.2 Unadjusted purchase activity was already about 15% below the same week a year earlier at the start of the month.1 Another sign of strain is the adjustable-rate share, which held at 10.3% as buyers looked for lower starting payments.1

The pipeline is getting worse, not better. Redfin's September housing report showed seasonally adjusted pending sales down 4% from August, the largest monthly drop in more than three years. Pending sales were also down 8.6% from a year earlier and at their lowest level since spring 2014, not counting the April 2020 pandemic freeze.43 About 14.5% of signed contracts were cancelled, the highest share Redfin has recorded.47 Cancellations were highest in Sun Belt markets such as Jacksonville, Tampa and Las Vegas.43

Closed sales and prices look calmer, for now

The National Association of Realtors' data looks steadier. Existing-home sales rose 1.5% in September to a seasonally adjusted annual pace of 3.99 million. That was still 2.2% below a year earlier and the second month in a row under 4 million.33 The increase is weaker than it looks, because NAR revised August down to 3.93 million. NAR chief economist Lawrence Yun said he would discount the monthly gain for that reason and described the market as "scraping to the bottom" of its recent range.33 Closed sales also reflect contracts signed weeks earlier, before rates passed 7%, so they understate the slowdown that application and pending-sales data already show.34

Prices have held up. The national median existing-home price was $417,500, up 1.3% from a year earlier. That was the 39th straight month of annual gains and the highest median ever recorded for a September.33 Under that headline, the regions differ. The Northeast median rose 4.7% to $523,600, while the West's median fell 0.3% to $613,600, the only region to post a decline.31 Inventory reached 1.60 million homes, or 4.8 months of supply, and NAR described it as the highest since November 2019.3332

Redfin's local data shows the same split. Prices in its five seller's markets rose an average of 6.4% from a year earlier in August, compared with about 1% across buyer's markets.45 So the national median is an average of two different markets: supply-starved Northeast metros where prices are still climbing, and a Sun Belt where prices are close to flat. Over time, falling demand plus growing inventory should push resale prices down. The National Association of Home Builders' economists expect the recent inventory gains to weigh on resale prices in most markets.39

A Sun Belt glut and a short list of tight markets

According to Redfin, 41 of the 50 most populous metros were buyer's markets in September, the most it has recorded. Only five were seller's markets.41 Miami had the largest surplus, with 158.9% more sellers than buyers, up from 134.5% in August. Tampa had the next-largest monthly jump, reaching 103.7%.49 In all of the 13 strongest buyer's markets, sellers outnumbered buyers by more than two to one. All 13 are in the Sun Belt, including four in Texas and four in Florida.41 Redfin cites strong homebuilding as one reason for the imbalance, along with rising insurance and HOA costs in Florida.43

The seller's markets are Nassau County, NY; Montgomery County, PA; Newark; Milwaukee; and San Francisco.41 Redfin ties the Northeast metros to years of limited construction near major job centers. It sees San Francisco differently, as a market heated by wealth from the AI boom.41 This list has changed little since February, when Redfin's count already showed most of these same metros tilted toward sellers while Miami, Nashville and Texas metros led the buyer's markets.48

Builders pull back

New construction is slowing too. Housing starts fell 5.2% in September to an annual rate of 1,221,000, 7.4% below a year earlier. Single-family starts dropped 4.6% to 859,000.2221 Single-family permits, which point to future building, fell 4.0% to 845,000. Total permits were nearly flat at 1.4 million.21 The monthly change in starts was within the Census Bureau's margin of error, so on its own it doesn't settle much.25 The statistically significant moves were the 14% annual drop in completions and the year-over-year decline in starts for buildings with five or more units.30

In the short run, fewer starts will slow the flow of new homes in the overbuilt Sun Belt, which could eventually ease the surplus there. The longer-run risk is familiar: if building stays weak, it will add to the shortage that keeps the Northeast tight.

Where rates go from here

Forecasts have shifted up quickly. Fannie Mae's October outlook now expects the 30-year rate to average 7.4% in the fourth quarter and 7.5% through 2027. The MBA expects 7.3% at year-end, easing to 7.1% by late 2027.18 Some widely shared forecast tables still list year-end figures near 6.8%, numbers that the September spike has overtaken.11 The MBA also projects that mortgage originations will fall 5% in 2027 as rates stay above 7%.6

In the near term, there is a bit of relief. Bankrate's expert panel mostly expected rates to stay flat in late October.14 One weekly outlook projected a slight drift toward 7.18% heading into the Fed's October 28 decision, though it rated its own confidence as low.12

The takeaway

The 63% figure shows a market where owners can wait and buyers mostly can't. Redfin notes that many owners have substantial equity and face little pressure to sell while the job market holds up.49 That leaves listings building up while demand falls. For buyers who still qualify, this is the most leverage they've had in over a decade. Redfin's Chen Zhao says sellers are negotiating on price, closing costs and repairs, and some are paying for rate buydowns.43 Redfin also says flatly that this is a buyer's market only for people who can afford to buy.41

With rate forecasts at or above 7% through 2027, it's hard to see what would bring buyers back soon. Applications, pending sales and cancellations are all moving the wrong way. The more likely way the gap closes is that sellers give up and take listings off the market, or prices outside the Northeast start to fall.