Real Estate Market Update: October 2025

Mortgage rates are still coming down, and inventory is opening up, but buyers are taking their time.

We’re in that “in-between” phase of the market. Buyers have a little more room to breathe, sellers are adjusting their expectations, and everyone is keeping an eye on interest rates to see where things go next.

Let’s take a look at what’s happening and what it means if you’re thinking about buying or selling soon.

October Housing Market Trends

Mortgage rates continue to fall, but buyers are still hesitant to make a move.

Existing Homes

Existing home sales saw a 1.5% month-to-month increase in September, and a 4.1% increase over the past year, according to the National Association of Realtors (NAR). Falling mortgage rates have helped lift home sales, and median existing-home prices have risen by 2.1% to $415,200.

Improved housing affordability has also contributed to an increase in sales, NAR Chief Economist Lawrence Yun pointed out. Many homeowners are also financially comfortable, which has resulted in fewer distressed properties and forced sales.

New Construction Homes

It’s been a challenging market, but builder expectations rose in October!

Builder confidence is up by five points, the highest reading since April, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The NAHB chairman pointed out that while recent declines in mortgage rates are an encouraging sign, there are still some challenges.

According to the NAHB, there are some markets with strong demand, including small builders shifting to remodeling and the ongoing solid conditions in the luxury market. However, many homebuyers are still on the sidelines, waiting for mortgage rates to drop further.

Housing Inventory

Housing inventory is at a five-year high, NAR reported. However, it’s still below pre-COVID levels.

Total housing inventory is up 1.3% from August and 14% from September 2024. There’s currently a 4.6-month supply of unsold inventory, no change from August, but up from 4.2 months in September 2024.

Mortgage Rates

Mortgage rates are still coming down! The Federal Reserve approved its second straight interest cut this month, CNBC reported, but Chair Jerome Powell has doubts on whether another is coming in December.

According to Freddie Mac’s Primary Mortgage Market Survey, rates decreased for the fourth consecutive month. The 30-year fixed-rate mortgage was 6.17% as of October 30, 2025, down from 6.34% at the start of the month. This is the lowest rate since October 2024.

Data from the Mortgage Bankers Association (MBA) shows that lower mortgage rates have sparked increased activity in mortgage purchase and refinance applications. 

DC Housing Market Update

In the Northern Virginia and D.C. housing markets, the market gained some momentum in September. 

According to the Northern Virginia Association of Realtors (NVAR), September’s closed sales were up by nearly 10% compared to last year, and total dollar volume climbed by 14.6% year-over-year, demonstrating steady demand across the region.

The median sold price dropped slightly to $715,000, a 1.4% decrease from last year. But the best news is that the region reported 2,660 active listings, a 40.5% increase compared to September 2024. The months supply is currently 1.93, a 34.7% increase year-over-year. This is the highest level available since before the pandemic.

Homes also sit an average of 28 days on market, up 40% from last year. This suggests buyers are taking more time to assess their options.

This price ease, expanding inventory, and lower mortgage rates are finally giving buyers some breathing room. However, buyers are definitely more intentional in this market, which means sellers need to be more strategic. 

Economy and Government Shutdown Sending Mixed Signals

Although the Fed cut rates again and mortgage rates are down, the economy is sending some mixed signals. The current government shutdown is also bringing uncertainty to the housing market.

According to Realtor.com, lower rates have given the housing market some momentum, but the macro risks are pulling it back.

Since May, mortgage rates have fallen by 70 basis points, Realtor.com reported, saving the typical buyer around $150 per month on their mortgage payments. However, we don’t have access to the usual labor market data. Fed Chair compared the Fed’s job to “driving in the fog,” saying that it may be better to ease back on future rate cuts.

Realtor.com’s internal data has also shown how this uncertainty is holding the housing market back. Inventory is up, but growth has slowed for five consecutive months. Homes are sitting on the market longer, and pending home sales are relatively flat.

Everything is doing okay for now, but consumer and data outlooks remain foggy until the government reopens. 

Only 28 Out of Every 1,000 U.S. Homes Changed Hands This Year

New data from Redfin shows that only 28 out of every 1,000 homes changed hands this year. This is the lowest turnover in 30 years. There were also 38% fewer homes sold this year than during the pandemic peak.

According to Redfin, this is because:

• Affordability challenges have still kept buyers on the sidelines.

• Sellers are unwilling to give up their low mortgage rates (more than 70% of mortgaged homeowners have a rate under 5%).

• Economic uncertainty means buyers are cautious.

“America’s housing market is defined right now by caution,” said Chen Zhao, Redfin’s head of economics research. More buyers are walking away from deals, and others aren’t even shopping. Instead, they’re waiting for prices or mortgage rates to come down.

Sellers are choosing to stay put, Zhao added, either because they’re locked into a lower interest rate or unwilling to accept offers below expectations.

Final Thoughts

The market isn’t racing the way it did a few years ago, but there’s steady movement and more options on the table. Buyers have room to compare and think things through, and sellers are getting more intentional with pricing, presentation, and timing. 

Even as rates ease, cautious behavior is still shaping activity, so strategy matters more than ever, whether you’re buying, selling, or just watching the market to decide your next move.

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.