September 2025 Housing Market Updates

The housing market in September 2025 stands at a crossroads, with the third quarter closing on a note of cautious optimism. A recent Federal Reserve rate cut, a surprising surge in new home sales, and steady builder confidence signal potential momentum. Yet, rising inventory, decelerating prices, and demographic shifts point to an uneven recovery.

For real estate appraisers, these dynamics underscore the need for precision in analyzing local data, applying time adjustments, and understanding the interplay of supply, demand, and economic policy.

Let’s explore the key trends shaping the market and their implications for appraisal practice.

Fed Easing Begins: A Gradual Boost for Housing

On September 17, the Federal Reserve cut the federal funds rate by 25 basis points to 4%–4.25%, marking the first reduction since December 2024 (Federal Reserve, 2025). This move, prompted by a softening labor market and moderate inflation, aims to ease restrictive monetary policy without signaling economic distress. Projections suggest another 75 basis points of cuts by year-end, with two more likely in 2025.

Mortgage rates are responding, with the 30-year fixed dropping to 6.35%, down 23 basis points from last month and the lowest since October 2024 (NAHB, 2025). While markets anticipate rates could fall to 3% by mid-2026, the Fed’s outlook suggests a slower decline through 2028. Inflation remains a concern, with potential tariff-related pressures complicating the outlook.

Implication for appraisers: Lower rates may spur demand, but existing home sales, reported at closing (30–60 days post-contract), won’t reflect this yet. Monitor pending sales for early demand signals.

New Home Sales Surge, But Starts Lag

August new home sales soared 20.5% month-over-month to a seasonally adjusted annual rate (SAAR) of 800,000—15.4% above August 2024 and well above expectations of 653,000, according to the U.S. Census Bureau. A slight rate drop (6.72% in July to 6.59% in August) likely fueled this, though revisions may moderate the figure. Inventory tightened to 490,000 units (7.4 months’ supply), with completed homes at 124,000—four times the 2022 low but still elevated.

Builders are leaning into affordability: 20% of sales were under $300,000 (an 11-month high), and 68% were below $500,000. The median price hit $413,500, up 1.9% year-over-year (YoY) (Realtor.com, 2025). However, housing starts weakened: August total starts fell 8.5% to 1.31 million, with single-family down 7% to 890,000 and multifamily dropping 11.7% to 417,000.

Implication for appraisers: New home comps are increasingly relevant, but incentives (used in 65% of deals) can obscure value. Segment by price tier, as affordable homes drive sales.

Builder Sentiment Holds, Expectations Rise

Builder confidence remained steady at 32 in September, per the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) (NAHB, 2025). However, future sales expectations climbed to 45, a six-month high, buoyed by expected Fed easing. Price cuts (39% of builders, averaging 5%) and incentives (65%) are widespread, reflecting competitive pressures.

Existing inventory supports this cautious outlook, up 20.9% YoY to over 1 million active listings for the fourth consecutive month, though still 14.3% below 2017–19 levels (National Association of Realtors, 2025). Months-of-supply reached 4.6 in July, surpassing pre-pandemic norms, with regional spikes like 14.1 months for Miami-Dade condos.

Implication for appraisers: Stable builder sentiment suggests a steady construction pipeline, but rising inventory may pressure prices. In high-supply markets (5+ months), verify concessions to avoid overvaluing. Track regional differences—Northeast (HMI 44) and Midwest (42) are stronger than South (29) or West (26).

Existing Market: Stagnant Sales, Softening Prices

Existing home sales have hovered near 4 million SAAR for 2.5 years, the lowest since 1995, with year-to-date sales down 1.3% not seasonally adjusted (NSA). Prices are weakening: the S&P CoreLogic Case-Shiller National Index rose 1.9% YoY in June but trended down with four consecutive monthly declines (S&P Dow Jones Indices, 2025). Median prices were up just 0.2% in July, and other indices show similar sluggishness, with the Intercontinental Exchange (ICE) Home Price Index rising only 1.1% YoY in August. National year-over-year price declines are likely by year-end.

Rents are flat, with multifamily asking rents down 0.9% YoY in August (Apartment List, 2025). Delinquencies remain low, ruling out a wave of distressed sales.

Implication for appraisers: Rising inventory and flat sales signal price pressure. Data lags mean recent comps and pending sales are critical. Longer days on market (29 days average) suggest negotiation, so verify seller concessions.

Demographics Shape Long-Term Trends

Household formation, a key demand driver, averaged 1.1 million annually from 2010–19, dipped in 2020, surged in 2021–22, then slowed (Calculated Risk). Census projections show immigration boosting younger age groups, but lower immigration could dampen growth. The early-30s cohort, a prime homebuying group, is shrinking, while Boomers may increase supply by selling post-2030 (U.S. Census Bureau, 2025).

Implication for appraisers: Softer demand from fewer young buyers and more Boomer-owned homes coming online suggest price moderation. Adjust for aging-in-place trends in senior-heavy markets and factor immigration into growth projections for cost and income approaches.

Final Takeaways: Precision in a Shifting Market

September 2025 marks a turning point: Fed easing, strong new home sales, and rising builder optimism hint at momentum, but inventory growth, price deceleration, and demographic headwinds temper expectations. The market is rebalancing, not booming or busting. Your expertise in navigating these nuances ensures credible valuations.

Until next month’s edition of The Full Measure, stay sharp, stay informed, and measure with precision.

Trust McKissock Learning, the leader in appraisal continuing education, to help you stay informed of changes to the housing market.