Cheryl Creasey put her Everett, Wash., house on the market in September at $769,000. A few people came to look. Nobody made an offer. Two price cuts later, she plans to drop below $700,000 this week. She and her husband had already bought their next house, and borrowed the down payment to do it. To cover two mortgages and that loan, she canceled nearly all her subscriptions and stopped putting money into her 401(k).
The headline number looked better than her week. Existing homes sold at a 3.99 million annual pace in September, up 1.5% from August, the National Association of Realtors said Tuesday. It was the first monthly gain since May. The Journal's survey of economists had called for a 0.8% drop. The catch is timing. Most of those deals were struck in July and August, when mortgage rates sat in the mid-6% range.
The rate moved after the buyers signed
On Sept. 1 the 30-year mortgage sat at 6.71%. By last week Freddie Mac had it at 7.4%, a level not seen in almost three years. A bond selloff drove the 10-year Treasury yield to its highest point in decades, and mortgage rates track that yield. Even so, no two months this year were slower for sales than August and September. September sales ran 2.2% below a year earlier.
Supply keeps loosening. There were 1.6 million homes on the market in September. That's 1.9% more than in August, 4.6% more than a year earlier, and the most since 2019. The lock-in effect, where owners cling to old low rates, keeps easing. NAR's Lawrence Yun said buyers now have more room to negotiate. Sellers, he said, “need to be realistic about local market conditions.” Prices haven't cracked. The median home sold for $417,500, up 1.3% from a year earlier. In Atlanta, Harris and Natalie Clayton lost two buyers who found they couldn't afford the house. Two price cuts later, nobody has come to see it in two weeks. Creasey's agent has floated pulling the listing until next year. Her question, in the Journal's telling, was whether everyone is “just racing to the bottom.”
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This is a Housing M6 story with a Cash Flow M5 bill attached, and the bill is the part we'd underline. Buy before you sell, and your paycheck carries two houses until a stranger buys one of them. Two mortgages plus a down-payment loan is three payments a month, with no end date you control. Creasey's fix was the 401(k). That pause costs her the contribution, any employer match on it, and the years of growth that money would've had. The price cuts are visible. The retirement cost is quiet, and it compounds. Nothing in September's numbers says the pressure lifts soon. Rates went up after those buyers signed.
Here's the connection to your own plan. If a move is in your next 12 months, write down the carry for two houses, for six months, before you sign for the new one. Carry means every payment that keeps both roofs over you, including any loan you'd take for the down payment. If that number only works by pausing your 401(k), the plan isn't ready. And if you've already paused contributions to get through something, this week's check is the match. Log into the 401(k) app and look at the contribution rate. Getting it back to the match level is the first dollar of the recovery. You don't wait for the rain to start to find out what the umbrella costs.