The October 2025 Real Estate Market Update reveals how the U.S. housing market is shifting as we move into the final quarter of the year.
This October market update focuses on three critical themes shaping the industry: the Federal Reserve’s influence, mortgage rate forecasts, and expectations for 2026.
For the fifth consecutive month, the number of homes on the market has exceeded one million active listings nationwide, a level not seen since 2019. Increased inventory is creating more opportunities for buyers, while sellers are adjusting their expectations as homes remain on the market longer.
Approximately 20 percent of listings in August 2025 included price reductions, signaling a market where accurate pricing and strong representation are more important than ever.
While home prices are still appreciating, that growth has moderated significantly. National averages remain positive, but local variations are becoming more pronounced. Some markets are still competitive and seeing price gains, while others are leveling off or showing mild declines.
The Federal Reserve continues to balance its dual mandate: price stability and maximum employment. Inflation remains slightly above the Fed’s 2 percent target, and job growth has slowed in recent months.
This slowdown may influence future rate decisions, particularly as policymakers seek to maintain economic stability amid uncertainty. A temporary government shutdown earlier this fall also complicated the Fed’s access to real-time employment data, which could shape decisions in the months ahead.
The good news for both buyers and sellers is that mortgage rates are projected to gradually decline over the next year.
Forecasts from Fannie Mae and other leading institutions suggest average 30-year fixed mortgage rates could fall to around 5.9 percent by late 2026.
This anticipated easing follows the Federal Reserve’s recent decision to begin a rate-cutting cycle and the corresponding narrowing of the spread between mortgage rates and the 10-year Treasury yield- a key indicator of market confidence.
As the gap narrows and market volatility decreases, mortgage rates are expected to trend lower, improving overall housing affordability and stimulating buyer demand.
Industry forecasts show total U.S. home sales increasing from 4.8 million in 2025 to approximately 5.2 million in 2026.
This steady upward movement represents a sort of “slight breeze at our backs," a modest but encouraging tailwind for the housing market.
Lower rates typically drive stronger buyer activity, and this trend has already begun. Late-summer declines in mortgage rates led to noticeable increases in showing activity and new loan applications. If this continues, the real estate market could see higher transaction volume in early 2026.
The agents who start client conversations now will be best positioned to thrive in 2026. As affordability improves, both buyers and sellers will look for guidance from trusted professionals who can interpret the data and explain what it means for their local market.
At Sanders Real Estate, we believe that knowledge and preparation define professional excellence. Our agents are equipped with current data, research, and market insights to guide clients confidently through any phase of the market cycle.
As inventory levels rise and mortgage rates begin to ease, opportunity is on the horizon. The work you do today (staying informed, communicating consistently, and educating your clients) will shape your success in 2026.
Source: October 2025 Monthly Market Report, Keeping Current Matters.
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