October marked the end of a three-year streak of monthly year-over-year gains.

U.S. home-sale prices declined in October, ending a three-year streak of monthly year-over-year gains that held firm even as mortgage rates climbed and would-be buyers pulled back. This data comes from a new report from Redfin.

The median home-sale price declined 0.4% year over year to $388,634 in October. That's the first decline since May 2023 and a sharp slowdown from the 2.5% gain just two months earlier. With Americans' wages growing about 4% year over year, even a slight dip in prices can improve affordability. Sale prices have risen nearly every single month for the last 13 years; the only exception was a handful of months in 2023.

With the total number of homes for sale at its highest level since early 2020 and demand cooling, homebuyers' negotiating power keeps increasing—and that's finally showing up in sale prices.

(All figures in the report are seasonally adjusted, with the exception of median sale price data and mortgage rate data.)

Home Prices Are Still Rising Fast in Hot Markets

Home-sale prices fell nationwide, but they rose in more than half of the 50 most populous U.S. metro areas. San Francisco led the nation by a wide margin, with the median sale price rising 16.8% year over year. That's the biggest increase since 2018. Next comes New Brunswick, N.J., with a 7.7% gain. Two other NYC-area metros also had price increases ranking in the top six; the median sale price rose 4.4% in both New York City and Nassau County.

Home-sale prices fell most in Austin, Texas, declining 6.5% year over year. It's followed by Seattle (-5.1%) and Nashville (-4.9%). Austin and Nashville are among the biggest buyer's markets in the U.S., and Seattle's shaky tech job market is curbing demand.

U.S. Pending Home Sales Drop to Lowest Level Since the Pandemic

National sale prices are losing steam because fewer Americans can afford to buy a home. U.S. pending home sales fell 3.6% from a month earlier in October on a seasonally adjusted basis to their lowest level since 2013, with the exception of April 2020. This is a real-time indicator of the state of the housing market; fewer homes went under contract in October largely because mortgage rates averaged 7.33%, a three-year high and up from 6.86% the month before.

"It's a buyer's market, but not many people can afford to buy," said Chen Zhao, Redfin's head of economics. "That could start to shift a bit, now that sale prices are closer to reflecting the shape of the market. House hunters in most of the country should know that the price they see on a listing may very well be a starting point; they should try offering below the asking price, and negotiating for closing costs, repairs and maybe even mortgage-rate buydowns. If you can't get the price or monthly payment you want on one house, move on to the next one—with a big pool of inventory sitting on the market, buyers can afford to be picky."

Pending home sales declined in all of the most populous U.S. metros. That's the second month in a row that has happened. Before September, the last time was three years earlier.

The biggest declines were in Seattle and San Diego, both places where pending sales fell more than 20% year over year. Those West Coast metros are some of the priciest in the U.S., so 7%-plus mortgages hit house hunters' monthly payments there hard. In Seattle, an uncertain local job market is also curbing demand.

Closed home sales fell to their lowest level in nearly 3 years. They declined 2.1% month over month in October to their lowest level since December 2023; before that, the last time sales dropped that low was 2014.

Many of the deals that closed last month went under contract in August and September, when rates were already climbing and economic uncertainty was deterring a lot of house hunters.

Housing Supply Builds to Highest Level Since 2020

With homebuying demand falling, supply is building. The total number of homes for sale rose 0.9% from September to its highest level since early 2020; that's the biggest monthly gain since May 2025.

Source: hbsdealer.com