Real Estate Market Update: October 2026

Homebuyers have more negotiating power as the housing market continues to slow down.

While home sales are sluggish, inventory has improved. Buyers have more options, but higher rates have created affordability challenges. More sellers are cutting prices and offering concessions to attract buyers, and more home purchases are falling through before closing.

Here's what you need to know about the October 2026 real estate market.

October Housing Market Trends

Despite the slower housing market, higher inventory and longer days on market mean buyers have more negotiating power. To attract buyers, more sellers might offer price discounts and other incentives.

Existing Homes

August and September were the two slowest months for home sales this year, according to the National Association of Realtors (NAR). While existing home sales increased 1.5% last month, they fell 2.2% over the past year.

NAR attributed this to recent increases in mortgage rates, which means fewer buyers can qualify to purchase a home. The median existing home price was $417,500, up 1.3% from last year.

New Construction Homes

Sales of newly built, single-family homes dropped 0.6% in September, the National Association of Home Builders (NAHB) reported. The pace of new home sales was 5.3% lower than the same period last year.

Builders are still offering incentives and lower pricing to entice buyers, but rising mortgage rates and economic uncertainty have kept many would-be buyers on the sidelines.

The median new home sale price was $400,400 – up 3.9% over the past month but down 3.9% from a year earlier.

Housing Inventory

We continue to see improvements in existing inventory, but total new-home supply has taken a hit.

Total housing inventory was up 4.6% from last year, NAR reported. There’s a 4.8-month supply of unsold inventory, up from 4.5 months a year ago. According to the NAHB, new home inventory is down 2.3% compared to last year. This represents an 8.4-month supply at the current building pace.

Mortgage Rates

According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), the average 30-year fixed-rate mortgage was 7.24% as of October 29, 2026. 

This is higher than we want, but the good news is that mortgage rates declined, reaching their lowest level in October.

DMV Housing Market Update

Northern Virginia’s housing market saw a big increase in available homes, especially in condo and townhome inventory.

According to the Northern Virginia Association of Realtors (NVAR), active listings increased 30.7% compared to last year, including the 49.7% year-over-year increase in condo and townhome inventory.

The NVAR also pointed out that the increase in available homes doesn’t mean more closed sales or lower prices. Buyers have more options, but higher costs and limited overall supply have still been a challenge.

The median sold price was $744,950, a 4.2% increase from last year. Average days on market remain unchanged at 28 days, and supply is up 2.5 months, a 20.5% increase from last year.

In D.C., new listings are lower than a year ago as sellers hold back, Bright MLS reported. Buyer traffic has also dropped considerably, thanks to higher mortgage rates.

Inventory is increasing, but lower demand could mean prices may drop in some local markets; however, significant price drops are not expected.

Higher Mortgage Rates Pushing Sellers to Cut Prices

Higher mortgage rates are putting more pressure on home sellers as more buyers are hesitant to make a move.

According to a September Bloomberg report, 19.5% of homes for sale saw a price cut in August, the highest share for that month since Redfin began tracking the data in 2020. Nearly 45% of home sales involved seller concessions, and homes spent a median of 50 days on the market.

The Federal Reserve raised interest rates in September for the first time in three years and signaled that additional rate hikes could be coming.

However, the slowdown isn't affecting every market equally.

Areas with more available homes are seeing even more pressure on prices, while markets with limited inventory are more competitive.

According to Redfin, 14.5% of home-purchase agreements fell through in September, or roughly one in seven deals, the highest rate recorded for that month. Meanwhile, home sellers outnumbered buyers by approximately 63%. This is the widest gap on record.

Pets Are Influencing Homebuying Decisions

For many homebuyers, finding the perfect home also means finding the perfect place for their pets!

According to NAR, buyers with pets are more likely to prioritize certain features when house hunting.

Pet-conscious buyers were 10 percentage points more likely to prioritize larger lots or acreage, while buyers with pets showed a greater preference for walkability (+12 points) and nearby parks and recreational areas (+6 points).

And location matters for four-legged family members, too! Sixteen percent of recent homebuyers said proximity to veterinary services was an important factor in their home search.

Final Thoughts

Buyers have more leverage than they've had in recent years.

More inventory, longer selling times, and price reductions have created more opportunities for buyers who can afford today's mortgage rates.

For sellers, pricing and flexibility matter more. Homes are still selling, but buyers have more choices and may be less willing to compromise.

Conditions also vary by location and property type. 

Here in the DMV, inventory is improving, but prices are still relatively strong. This just shows that more inventory does not make homeownership more attainable. The NVAR noted that expanding the supply of housing across a range of prices and types will be essential to meeting the region's needs.

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