U.S. housing market sees rising price cuts and inventory

The U.S. housing market is experiencing a shift in leverage toward buyers as inventory rises and sellers increase price reductions. In September, 20.8 percent of active listings saw price cuts, the highest September level since 2018. This trend is particularly pronounced in Western markets like Salt Lake City, Denver, and Portland, while Northeast markets like New York and Connecticut show more stability.

Inventory levels are growing, with active listings increasing 5.4 percent year-over-year to approximately 1.16 million homes. This growth has narrowed the gap between current supply and pre-pandemic norms to within 9.1 percent. However, high mortgage rates continue to act as a significant barrier; the average 30-year fixed rate climbed to approximately 7.03 percent in late September, contributing to a decline in pending sales.

Industry experts note a “mortgage lock-in” effect, where homeowners are reluctant to sell and trade their current low rates for higher ones. While the increased selection of homes creates a “choice market,” high borrowing costs remain a primary constraint on buyer participation and overall market velocity.