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Falling Mortgage Rates Spur 1.5% Uptick in September Existing-Home Sales

Existing-home sales rose 1.5% in September, according to Realtor.com, as a retreat in mortgage rates drew more buyers back into the market. The modest rebound highlights how sensitive housing demand remains to financing costs and poses renewed questions about affordability and supply constraints.

Sarah Chen3 min read
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Existing-home sales climbed 1.5% in September, Realtor.com reported, as easing mortgage rates encouraged hesitant buyers to re-engage with the housing market. The gain, while moderate, underscores the outsized role that interest-rate movements play in shaping demand for existing homes and could influence pricing dynamics in markets where inventory is already tight.

The Realtor.com release, published Oct. 23, 2025, ties the pickup in activity directly to lower borrowing costs. For many prospective purchasers, even small declines in mortgage rates translate into materially lower monthly payments, restoring some purchasing power that had been eroded during periods of higher financing costs. Economists and market participants say that the responsiveness of buyers to rate shifts remains high because home purchases are typically financed and because affordability pressures have been a central constraint on demand over the past two years.

Despite the rise in sales, the report signals a continuing tension between demand and supply. Existing-home inventories nationwide have remained lean by historical standards, limiting options for buyers and sustaining upward pressure on prices in many locales. With fewer homes on the market, the boost in buyer interest from lower rates is likely to be felt most acutely in metros where inventory is constrained and demand outpaces listings.

The policy backdrop matters for how durable the recent uptick will be. Mortgage rates generally track expectations for short-term interest rates set by the Federal Reserve, as well as broader financial conditions. A sustained retreat in rates could provide more lasting support to sales and put developers under pressure to increase construction, but that outcome depends on factors such as materials and labor costs, zoning constraints, and the pace at which builders ramp up activity. Conversely, any reversal in rate trends or renewed inflationary pressures could quickly cool momentum.

Market implications extend beyond transactions. Higher sales volume tends to lift related sectors, including home improvement, mortgage lending, and real estate services, feeding through to local economies. For homeowners, increased sales activity can reinforce price gains, bolstering household wealth for those selling but worsening affordability for new buyers. For policymakers, the episode highlights the trade-offs inherent in monetary policy: efforts to cool inflation by raising rates can suppress housing demand, while easing can revive activity at the cost of making affordability debates more acute.

Looking ahead, the tempo of sales will likely hinge on two interlinked forces: the path of mortgage rates and the supply response. If rates continue to decline, the market may sustain a slow recovery in transactions; if inventories loosen, price pressures could moderate, improving affordability. But absent a meaningful increase in new listings or construction, any demand rebound driven by lower rates risks simply reallocating scarce homes rather than expanding access to housing. The Realtor.com figures for September therefore provide a useful snapshot of a market still balancing on a narrow fulcrum between financing costs and limited supply.

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