Housing Market Reality Check: Prices, Inventory and Rates Now

The short answer: a slow market, not a collapsing one

Is the US housing market cracking, or just cooling? Based on data highlighted by Steven Thomas, chief economist at Reports On Housing, the honest answer is "cooling, with real pressure on sellers." Pending sales have fallen to a record low for September, mortgage rates have jumped well above where they started the year, and more homes are sitting unsold. But supply is still tight by historical standards, and few owners are forced to sell. That combination points to soft prices in many places, not a repeat of 2008.

This article walks through the numbers Thomas presented in his October 24 video, adds context on how to read them, and covers what they mean for people trying to buy or sell now. It is general information, not personal financial advice.

Pending home sales: a record low since 2001

The headline statistic came from the National Association of Realtors (NAR). Its pending home sales index for September was the lowest September reading since NAR began tracking the measure in 2001. Thomas noted that the index fell 7.3% from August.

Other comparisons he cited:

Two points of context are worth adding. First, pending sales count contracts signed, so they lead closed sales by about one to two months. A weak pending reading usually shows up in existing-home sales shortly after. Second, the NAR figure is an index, not a raw count of contracts. Thomas pointed out that his firm's local reports use actual pending counts instead.

He also argues that the pre-pandemic years of 2017 to 2019 are a better yardstick than 2021, when rates in the 2% range pushed activity to unusual highs. Under that lens, today's market has been stuck at low volume since the fall of 2022, and this is the first time in a while that it is clearly dipping below the prior year.

Why the market slowed: the rate shock

Thomas describes mortgage rates as the "brake" on housing, and his timeline shows why. Using the rate series he follows, the last reading at 5.99% came on February 27. The next day, he says, the Iran war began. From there, rates climbed slowly to about 6.75% and hovered until mid-July, as investors expected the conflict to end.

By late August, expectations shifted. Thomas says it became clear the conflict would run past the midterm elections, and investors who buy 10-year Treasuries and mortgage-backed securities started demanding higher yields to compensate for risk. Rates then rose about three-quarters of a point in roughly four weeks, topping 7.5%. He says the last time rates moved that fast was September 2022.

Since then, he reports a partial pullback to 7.33% as of October 23, which he attributes to investors buying back in after the spike rather than to better inflation data. He noted that inflation readings the prior week were poor.

Two cautions. These figures come from the creator's rate tracker, which may differ from the weekly average in Freddie Mac's Primary Mortgage Market Survey (PMMS). Daily lender quotes often run higher or lower than the PMMS number. And the link between geopolitical events and rates is his interpretation. Treasury yields respond to inflation, jobs data, Federal Reserve expectations and global demand all at once. For more on that connection, see our explainer on Treasury yields and mortgage rates.

What the rate move does to purchasing power

Thomas offered a clear illustration. Take a buyer with a $3,000 monthly budget for principal and interest, putting 20% down:

That is roughly $89,000, or 14%, less house for the same payment. At 7.33%, our own back-of-envelope arithmetic suggests a figure in the mid-$540,000s, so a modest improvement but still far from February. These figures exclude taxes, insurance and mortgage insurance, which would lower the affordable price further.

Inventory is up, but context matters

Many bearish headlines focus on rising inventory, and Thomas does not dismiss it. Roughly 1.6 million homes are on the market nationally, he says, which is more than at any time since the pandemic began. But he stresses three comparisons:

• In 2019, inventory was close to 2 million homes.
• In 2006 to 2008, during the housing bust, there were about 4 million homes for sale.
• Current supply is therefore still thin relative to both periods.

He explains the recent rise as a slowdown in buying rather than a flood of new listings. New listings normally fade in October, November and December, and he expects inventory to peak around November before falling. What is happening, in his view, is that higher rates have reduced demand, so fewer listings convert to pending sales and homes pile up and compete with each other. The same pattern showed up in late 2023 and 2024, when rates also peaked in the fourth quarter.

Months of supply and days on market

Thomas prefers to express supply in days rather than months. His figures for September:

• Expected market time: 144 days
• One year earlier: 135 days
• 2017-2019 average: 126 days

He says this is the slowest reading for this time of year since 2014. By comparison, he cites a supply of more than 300 days at the depth of the Great Recession in 2008. In other words, sellers face more competition and slower sales, but not the pressure of a bubble bursting.

Prices: soft, not collapsing

On pricing, Thomas is careful on both sides. He says there is pressure on values and that prices can fall. Nationally, he expects the year-over-year trend to turn negative, as it did briefly around the end of 2024 and start of 2025. In the 2022 rate whipsaw, when rates went from about 3.25% to 7.37%, monthly declines were still smaller than 0.2%.

He also says that if rates stay in the 7% range, a hypothetical 2% annual price decline in many markets would be plausible. That is a scenario, not a forecast, and it is far from the "30% slide" headlines he criticizes.

His core argument is that a true crash needs three ingredients: lots of homes for sale, weak demand, and sellers who must sell. Today, he says, only weak demand is present. Most owners hold low-rate mortgages and can wait. If you are curious how that plays out among sellers, our piece on sellers waiting for lower mortgage rates covers when holding out stops paying.

Local markets and "showcase" homes

National averages hide big differences. Thomas says New York and San Francisco are strong right now, while Las Vegas and Austin are slow. He also describes "showcase" homes: properties that are turnkey, well presented and priced correctly. These can go pending within about 10 days with multiple offers, even in a sluggish market. Properties that need work or are overpriced sit.

What this means for you

If you are buying

• Your negotiating position is better than in recent years: more choices, more price reductions and more time to look.
• Thomas advises against lowball offers. He gave the example of a $600,000 home attracting a $520,000 offer because the buyer heard the market was slow. His reasoning is that sellers who do not need to sell tend to get insulted and walk away.
• Do not subtract a predicted future price decline from today's price. Expected drops happen gradually, so a discount you expect over a year will not appear in one offer.
• Run your budget at today's rate, and consider how you would handle a refinance if rates fall. Our article on adjustable-rate mortgages explains the trade-offs of some alternative structures.

If you are selling

• Pricing and condition matter more than they did when buyers had few options. Overpriced homes face growing competition.
• Seasonal listing declines through December mean fewer rival listings, but also fewer buyers in winter.
• Look at your own zip code's days on market and price-cut share, not the national average.

If you own and are not selling

• A national slowdown does not change your mortgage payment. Values may drift lower or flat in some markets, but there is no pressure to act unless you need to move.

Counterpoints and limits

Thomas's view deserves scrutiny. Reports On Housing sells subscription market reports, and the video promotes them, so readers should weigh that commercial interest. His data selection also leans on supply and price-pressure measures that support a "no crash" view. Several things could change the outlook: a deeper job-market downturn could create forced sellers, and sustained rates above 7% could lower prices more than the 2% scenario he mentions. Against that, rates could fall quickly if inflation eases or conflict ends.

Also note that the transcript's figures come from auto-generated captions and a single presenter, and some numbers, such as inventory, are rounded in speech. Check key figures against NAR, Realtor.com and Freddie Mac before making decisions. Other recent coverage, such as our look at housing market buyer demand, shows the picture can look different depending on the metric.

What to watch next

• NAR's pending and existing-home sales releases for confirmation of the September weakness.
• Weekly Freddie Mac PMMS rates versus the daily rate trackers.
• Inventory peak timing in November, then seasonal declines.
• Month-over-month price indexes turning negative nationally.
• Local days-on-market and price-reduction counts in your own area.

The reality check, in short: the market is genuinely slow and rates are doing the damage, but the supply and forced-sale conditions of a crash are not in the data Thomas cites.