Everything that usually breaks home prices is on the table. Mortgage rates hit 7.4% for the first time since November 2023. In September, 1.5 million Americans were trying to sell a home, and only 929,000 were buying, by Redfin’s count. That’s a surplus of nearly 600,000 sellers, the biggest in Redfin’s records back to 2013. And prices still aren’t falling. Carol Ryan’s Heard on the Street column explains the missing piece. Owners aren’t desperate.
Compare it with November 2023, the last time rates were this high. Back then there were 1.15 million sellers and 1.05 million buyers, a gap of about 100,000. The lock-in effect is fading. More than a third of home loans now carry a rate above 5%, versus a fifth in 2023, Intercontinental Exchange data show. People paid off cheap loans, or gave them up for a job move or a divorce. So more owners can sell without losing a bargain mortgage. Meanwhile buyers are squeezed. The median home sold for $417,500 in September, up 8% since November 2023. The number of buyers is down 11% from late 2023.
Cutting everything but the price
Sellers are bending, just not where it counts. In the four weeks through Sept. 20, a fifth of sellers cut their asking price, and nearly half gave something back, like closing costs or repair money. Monday’s paper showed builders doing the same with rate buydowns. But big price cuts aren’t coming. “A metric that I would love to have is how motivated those sellers are,” Morgan Stanley’s Jim Egan told the Journal. Jobs are steady and mortgage delinquencies are low, so most owners feel no pressure to sell. Instead, owners quit. In September, 6.1% of sellers pulled their homes off the market, a record. In Chicago it was 18%. There are pockets of distress, mostly in the Sunbelt. In Austin, Texas, values are down 27% from their 2022 peaks.
The cushion is the real story. Owners’ equity is 72% of the value of all U.S. housing, against 55% at the end of 2007, right before the last crash. Nearly half of mortgages still sit below 4%. And 7.4% only feels high. The 30-year has averaged 7.7% since the early 1970s. Ryan’s bottom line is that buyers’ best hope is incomes growing faster than prices. That’s a slow grind.
Our read
This is Housing, M6. Our read is that a price crash isn’t the base case, and waiting for one is a plan built on hope. The three things behind the 2008 crash are mostly missing today. Back then owners had thin equity, many were forced to sell, and few had a cheap loan worth keeping. What buyers do have is leverage on the small stuff. Nearly half of sellers are paying concessions. Ask for them. Sellers who’d rather rent than cut should run the landlord math honestly, with a vacant month and a repair bill in it.
Your check this week is the “wait for prices to drop” line in your own housing plan, if you’ve got one. Rerun the payment at 7.4%, the rate that’s actually printed, and look at where the down payment is sitting while you wait. If it’s in a checking account earning nothing, that’s a cost of waiting too. If you’re on the selling side and thinking of pulling the listing, write the rent next to the mortgage, taxes and insurance before you do. We’d be glad to look at either page with you. A plan built on today’s rate beats one built on a crash that may never come.