Real Estate Market Update: September 2025

The housing market has been a little unpredictable lately, but there have been some encouraging signs!

Mortgage rates are sliding down, more homes are popping up for sale, and buyers are starting to get some breathing room. Sellers are still in a good spot, too, especially with prices holding steady. 

Want the latest housing market news? Let’s break down what’s happening right now.

September Housing Market Trends

It’s been a slow month, but lower mortgage rates and higher inventory levels are a sign of good things ahead.

Existing Homes

Existing home sales remained relatively stable in August, dropping by only 0.2% from July, according to the National Association of Realtors (NAR). The median existing-home price saw a 2% increase from a year ago, reaching $414,600.

NAR Chief Economist Lawrence Yun said that high mortgage rates and low inventory have kept sales sluggish, but with rates declining and more homes coming on the market, activity should improve.

He also noted that homeowners with record equity are fueling the upper end of the market, while affordable homes remain in short supply.

New Construction Homes

New construction homes had an unexpected gain in August!

According to the National Association of Home Builders (NAHB), sales of newly built single-family homes jumped 20.5% in August, thanks to a modest drop in mortgage rates. The pace of new home sales is also up by 15.4% from last year.

Buddy Hughes, chairman of the NAHB, said that the organization expects a general improvement in sales over the coming months, supported by the recent decline in mortgage rates and builder incentives. NAHB survey data shows that 37% of builders reported lowering prices in August, and 66% reported using sales incentives.

The median new home price was $413,500, a 1.9% increase from the previous year.

Housing Inventory

Existing-home inventory was down from 1.3% in July, but up 11.7% from August 2024. Currently, there’s a 4.6-month supply of unsold inventory, NAR reported.

New home inventory declined for the third month, according to NAHB. At the current sales pace, there’s a 7.4-month supply of new construction homes, down from 8.2 a year ago.

Mortgage Rates

For several weeks, mortgage rates declined to their lowest level since October 2024, but inched up again recently, according to Freddie Mac’s Primary Mortgage Market Survey (PMMS).

As of September 25, the 30-year fixed-rate mortgage was 6.3%, down from 6.5% at the beginning of the month and from over 7% at the start of the year.

Freddie Mac also noted that housing market activity remains strong, with purchase and refinance applications increasing by 18% and 42%, respectively.

DC Housing Market Update

In the Northern Virginia and D.C. housing markets, buyers are gaining more time and choices, while sellers continue to benefit from higher home prices.

According to the Northern Virginia Association of Realtors (NVAR), the August 2025 market ran at a slower pace, accompanied by continued price growth. More homes came to the market, and listings were active longer, giving buyers more options. On the other hand, sellers are still seeing year-over-year price appreciation.

Closed sales increased by 2% from August 2024, and the median sold price in August was $750,201, up by 1.7% compared to a year ago. There was also a significant increase in inventory. The growth in housing supply increased by 36.4% from August 2024, helping to push the average days on market to 26 days. This is a 44.4% increase from the 18-day average last year.

Axios noted that the DMV’s housing market may be cooling due to the DOGE cuts made earlier this year. Housing supply is rising faster in the D.C. area than it is nationwide, in part from former federal employees trying to sell their homes, according to a report from Redfin.

Locals are feeling uncertain, but this also gives buyers the chance to take advantage when competition is down. There’s still plenty of demand, which has kept prices steady, but buyers have more leverage.

Mortgage Rates Could Fall Below 6% in 2026

According to Fannie Mae, mortgage rates are forecast to be at 6.4% by the end of 2025 and 5.9% by the end of 2026.

Realtor.com pointed out that these are downward revisions from a month ago, and if this were to happen, it would be the first time rates have been at that level since 2022.

Rates fell ahead of the Federal Reserve’s first interest rate cut since 2024, but Realtor.com added that movement in the bond market suggests they may have bottomed out. 

Realtor.com senior economic research analyst Hannah Jones says that the 6% level may be more of a psychological barrier for some homeowners. If households see rates below 6% as “normal” compared to the 7% highs of recent years, then anything under that level could motivate demand.

Summer 2025 Was the Strongest Buyer’s Market in Over a Decade

There were far more sellers (35.2%) than buyers in the August 2025 market, according to Redfin. There were 506,000 more sellers that month, meaning that buyers held more negotiating power.

Buyer activity also fell to just 1.4 million, the lowest level since 2013 outside of the pandemic, while seller activity started to cool with 50,000 fewer listings since May. Florida and Texas posted the strongest buyer’s markets, while only a few seller’s markets remained, primarily along the East Coast.

For buyers, this meant more options, greater leverage in negotiations, and less pressure to make offers above asking. 

Sellers, on the other hand, faced longer listing times and had to price competitively to attract offers.

Looking ahead, if mortgage rates continue to ease and affordability improves, more buyers could re-enter the market. That shift could turn the tide by reducing buyer leverage and creating a more competitive environment for well-priced homes.

Final Thoughts

The market feels like it’s finally finding its footing. 

Buyers finally have more choices and room to negotiate, while sellers can still lean on strong prices. If mortgage rates keep dipping, we could see more people jumping back in, which could make things a lot more competitive heading into next year.

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.