For the second month in a row, home prices rose on an annual basis in September (+0.4%) as the inventory shortfall lingers, with the number of homes on the market falling year over year for the third consecutive month (-4.0%), according to the® September Monthly Housing Trends Report released today. Active inventory remained 45.1% below pre–pandemic (2017-2019) levels, although the number of homes for sale increased month-over-month (4.9%) in September, contrary to typical seasonal trends but attributable to the unusual bump in new listings in August.

READ MORE: State of Arizona housing: Here’s a look at the numbers

This month, new listings realigned with typical declines between August and September. However, despite persistent inventory challenges bolstering prices, an unseasonable month-over-month uptick in price reductions hints at potential market adjustments. While a greater share of homes saw price reductions during the past month than expected for this time of year, the percentage of homes with price reductions decreased year over year, from 20.2% in September of last year to 17.8% this year, and remains below typical levels seen from 2017 to 2019. This suggests that buyer and seller expectations aren’t significantly misaligned, at least for now.

“An uptick in homes with reduced prices is a small break for buyers on top of the usual seasonal factors that align to make this first week in October the best week to buy. Yet, the larger context remains challenging. Buyers still struggle with the triple threat of rising listing prices, record-high mortgage rates, and limited inventory, making affordability a continued concern,” said Danielle Hale, Chief Economist for®. “The number of homes for sale is likely to remain low as higher mortgage rates leave many homeowners feeling ‘locked in’ to their current rates. Data shows low inventory is pushing many homebuyers toward new homes, but the growth in new construction isn’t enough to sufficiently narrow the inventory gap.”

Metro Phoenix home prices and inventory

Median Listing Price: $532,000

Median Listing Price YoY: +7.6 %

Median Listing Price per square foot YoY: +0.6 %

Active Listing Count YoY: -44.3 %

New Listing Count YoY: -20.8 %

Median Days on Market: 39

Median Days on Market Y-Y (Days): -7

Price Reduced Share: 24.4 %

Price Reduced Share Y-Y (Percentage Points): -20.4 pp

What it means for homebuyers, sellers, and the housing market

While the unexpected rise in new home listings from July to August led to higher September inventory than typically seen this time of year, homes are selling quickly, keeping overall inventory limited. This scarcity has been a driving factor in maintaining high listing prices.

Despite a greater share of homes with price reductions, affordability headwinds continue: higher mortgage rates have increased the monthly cost of financing 80% of the typical home by roughly $256 (+12.4%) compared to a year ago, far outpacing wage growth (+4.3%) and inflation (+3.7%).

“Homes on the market are still moving quickly, indicating that many buyers are accepting today’s high prices and mortgage rates and adjusting their expectations,” said®‘s Executive News Editor Clare Trapasso. “That may mean a number of things: settling for less space or moving farther away from large cities or to a different region.”

To help determine their best next step, potential homebuyers can tap into® RealCost tools, including the Affordability Calculator or the Rent vs. Buy Calculator. 

Listing prices stay steady, but price cuts climb uncharacteristically

In September, the national median home listing price declined seasonally from August, but increased slightly over September 2022, marking the second month in a row that listing prices have increased on an annual basis. Limited inventory has kept listing prices high, and while new home sales are elevated, new construction hasn’t been able to fully address inventory constraints. Meanwhile, although the share of price-reduced homes is down compared with last September, month-over-month growth is beginning to mirror last year’s trend, with price cuts accelerating in the fall as high listing prices and interest rates deter many buyers.

  • While the U.S. median list price saw a seasonal monthly decline, to $430,000 from $435,000 in August, it is up +0.4% compared to last year.
  • All regions saw active listing prices in larger metros increase on average, but Northeastern metros saw the highest annual growth rate (+10.0%).
  • Prices in Los Angeles (+23.8%), San Diego (+18.2%), and Richmond, Va.. (+15.0%) saw the biggest increases among large metros, predominantly due to larger and more expensive homes coming on the market in these areas. Larger Southern metros saw the lowest listing price growth rate among the regions (3.1%).
  • Among the largest 50 metros, only eight saw their median list price decline, led by San Antonio (-2.8%), Memphis, Tenn. (-2.1%), and Houston (-1.5%).
  • Nationally, the share of homes with price reductions decreased from 20.2% in September of last year to 17.8% this year and remains below 2017-2019 levels on average.

Fourteen of the 50 large metros saw the share of price reductions increase compared to last September, predominantly in the South and Midwest. Memphis, Tenn., saw the greatest increase (+6.0 percentage points), followed by Indianapolis (+4.4), and San Antonio (+3.4).

Inventory rises from August levels, yet remains scarce

While newly listed homes showed an unusual increase from July to August this year, higher mortgage rates and more typical seasonality realigned inventory with the expected seasonal decline from August to September. Year over year, the number of homes actively for sale decreased on an annual basis in September for the third consecutive month, following a period of growth starting in April 2022. This can be attributed in part to highly unseasonal inventory growth in 2022 as the market slowed down late last summer and into fall. However, the gap between this September and the same time last year is narrowing, as inventory increased month over month on the heels of an unexpected bump in new listings in August. Even so, active inventory remained below typical 2017-2019 levels.

  • Nationally, active inventory in September dropped -4.0% year-over-year. Despite an increase in homes for sale from August to September (+4.9%), active inventory remains -45.1% below 2017-2019 levels.
  • Pending listings fell -12.2% from the same time last year, more than August’s -11.5% decline due in part to higher mortgage rates in July and August, but significantly better than December’s peak decline (-36.9% year over year). Pending listings are an early indicator of future sales, which slowed to an annual pace of 4.04 million in August.
  • Newly listed homes fell -9.1% compared to September last year, more than August’s -7.5% year-over-year drop.
  • Regionally, inventory grew slightly in the South, by 1.5% compared to September 2022, but declined year-over-year in the West (-27.7%), Northeast (-12.9%), and Midwest (-6.9%).
  • In the 50 largest U.S. metro areas, the number of homes for sale is -41.9% below pre-pandemic levels. Inventory decreased in 36 out of 50 of the largest metros compared to last year, although some Southern metros saw significant growth, such as Memphis, Tenn. (+35.6%), New Orleans (28.4%) and San Antonio (24.4%).
  • Among the top 50 metros, San Antonio (+4.4%), and Buffalo, N.Y. (+2.1%) saw new listings increase. Declines in newly listed homes were greatest in Las Vegas (-31.7%), New York, N.Y. (-23.6%) and Detroit, Mich. (-21.9%).

Homes selling two weeks faster than pre-pandemic period

While the time the typical home spent on the market remained fairly flat year over year this September, the typical home spent two weeks less on the market this past month than during the average September from 2017 to 2019. Time on market is rising more slowly this year, as homebuyers compete for limited supply.

  • In September, the typical home spent 48 days on the market, only one day longer than the same time in 2022, but two weeks less than in the average September between 2017 and 2019.
  • Regionally, only large metros in the South saw time on market increase on average year-over-year (+1 day). Large metros in the Northeast spent 2 days less on the market, those in the Midwest spent 3 days less on the market, and homes spent 4 days less than last year in the West.
  • Time on market increased in 17 of the 50 largest metros, including New Orleans (+11 days), Austin, Texas (+8 days), and Nashville, Tenn. (+6 days).
  • Time on market decreased compared to last year in 30 of the 50 largest metro areas. The largest drops were in San Jose, Calif., San Francisco (-9 days), and Sacramento, Calif. (-8 days). This is primarily because this region experienced the most significant slowdown last year when interest rates rose.