The Fed finally cut interest rates — and the market expects two more cuts before year-end. At the same time, Zillow reversed its forecast again.
So, are we seeing a real recovery or just a short-term bounce?
Last month, the Fed made its first cut of 2025, and mortgage rates dropped to their lowest level in a year. Homeowners are refinancing, and buyers are coming back — but that doesn’t mean prices will soar overnight.
In today’s report, we’ll look at three things:
First, how the national market’s reacting to lower rates.
Second, what’s happening in Seattle.
And finally, how buyers and sellers can take advantage of this shift.
Let’s get into it.
📈 US Mortgage Rates & National Market Snapshot
First, let’s look at the impact of this rate cut on the market. On September 17th, the Federal Reserve’s first rate cut of the year finally happened, a reduction of 25 basis points, bringing the benchmark rate to a range between 4.00% and 4.25%. This was also the first move of 2025, but it likely won’t be the last. The market generally predicts two more rate cuts within the year.
According to CME FedWatch data, the probability of another cut by the end of October is close to 95%, and the probability of another cut in December is about 80%. Therefore, “three consecutive cuts” within the year are all but certain.
According to the latest data from Freddie Mac, for the week ending October 2nd, the 30-year fixed rate is 6.34%, and the 15-year fixed rate is 5.55%. This is a slight increase compared to last week.
However, we have learned that some quicker-acting banks have already started to slowly lower their mortgage rates. Among our own clients, some have already secured 30-year fixed rates of 5.8% or 5.9%, and for 15-year terms, rates can even be around 5.5%.
So, what is the current situation in the national market?
First, prices haven’t crashed, but they aren’t rising much either. The latest data from Redfin shows the national median sales price is over $390,000, up 2.5% year-over-year, the largest increase in the past 6 months; the median list price is over $400,000, up 2% year-over-year.
Second, monthly payment pressure persists. Calculated at an average rate of 6.3%, the typical monthly payment is $2,590, which has rebounded by about $37 from the low point in August.
Third, sales are slowing down. Nationwide Pending Sales, meaning the number of homes under contract, decreased by 0.9% year-over-year, the largest drop in nearly 5 months. There are now about 500,000 more sellers than buyers in the market, making it a market where buyers can actually negotiate terms. Especially for listings that have been on the market for more than three weeks and have had multiple price reductions, it’s now easier to negotiate a lower price or seller credit.
📁 Real Estate Agency Forecast
Next, let’s look at the latest national home price forecast report released by Zillow. At the end of September, they revised their 12-month home price forecast from April’s “decline of 1.7%” to an “increase of 1.2%”. This sounds like a market reversal, but it’s more like a correction of the earlier “excessive pessimism”.
Zillow’s forecast trajectory has been like a roller coaster this year—at the beginning of the year, they were optimistic, predicting a 2.6% price increase over the next year; then by April, they made a sharp turn, forecasting a 1.7% decline; by August, they slightly adjusted it back to +0.4%; and now in the September report, they have revised it up again to +1.2%.
In other words, it took Zillow only six months to shift from “pessimistic” to “cautiously optimistic”.
So why did Zillow change its tune? They cited three reasons:
First, growth in supply is slowing. In August, the number of new listings nationwide increased by only 2.5% year-over-year, much lower than the pace in spring. Many sellers, seeing unclear market conditions, are choosing “not to sell for now,” making inventory considerably lower than expected.
Second, buyer confidence is slowly recovering. Against the backdrop of strengthening rate cut expectations, buyers’ financing costs are beginning to improve. Although mortgage rates are still in the 6% range, some loan offers in the 5% range have appeared in the market, indicating that liquidity is recovering.
Third, buyers with rigid demand are becoming active again. Zillow’s data shows that sales of entry-level homes increased by 4% in August. In other words, those who truly “need to buy a house” are starting to return.
However, don’t assume home prices will rebound across the board. Zillow’s forecast seems more like a “structural repair”—meaning some areas are rising while others are still falling.
The most noticeable increases are in the Northeast, such as Atlantic City, New Jersey; Torrington, Connecticut; and Providence, Rhode Island, where prices are expected to rise about 4% over the next year. Areas seeing more significant declines are in the South and West, such as New Orleans down 4.8%, Austin down 2.4%, and San Francisco down 2.3%.
Therefore, the US market is entering an era of divergence: home prices will continue to appreciate in areas with low inventory, while they will begin to fall in areas with high inventory.
🏠 Seattle Real Estate Data
What about Seattle? Zillow’s forecast is—0%.
That means they believe Seattle’s home prices overall will remain flat over the next year—no significant rise, no significant fall.
This aligns with my own assessment of the market. We can see two counteracting forces in Seattle’s market right now: on one hand, the recovery in liquidity from rate cuts will stabilize buyers; on the other hand, inventory accumulation and the economic slowdown will put pressure on prices. These two forces are pulling against each other, resulting in a “sideways trend”.
The median sales price is $860,000, up 1.2% year-over-year but down slightly 1.1% month-over-month. The average price per square foot is $531, basically flat compared to last year. The Months Supply of Inventory (MSI) remains around 3.5 months, which is a balanced level.
We can also see that sales are slower than last year, with the average days on market for a home being about 20 days, 50% higher than last year, indicating that buyers’ room for negotiation is increasing.
It’s important to note that price changes vary by area, housing type, and price point.
For example, we currently see that the price of single-family homes in Seattle has increased by 2% compared to last year, the current inventory is 2.9 months, and the median time on market is 16 days, still a seller’s market. In contrast, condo prices have decreased by 6% year-over-year, inventory has reached 4.4 months, and the time on market has doubled compared to single-family homes, making it already a buyer’s market.
💬 Advice for Buyers & Sellers
Having covered the national and Seattle markets, let’s talk about the key point—what should buyers and sellers actually do?
First, for buyers. This phase of the market is quite friendly to buyers. Inventory is up, sellers are more willing to negotiate terms, and interest rates are stabilizing and trending down. If you are a buyer with rigid needs, now is the time to pick from inventory and look for opportunities.
Especially for homes that have been on the market for over 30 days and have price reduction records, these listings generally have more room for negotiation, and the final sale price can often be lower than expected.
Additionally, everyone should also consider looking at New Construction. According to a Realtor report from late August, for the first time this year, the national median price of new homes and existing homes has “inverted”—the median price of new homes is actually about 4% to 5% cheaper than existing homes. This also indicates that builders are accelerating inventory reduction through price cuts and rate buydowns. For buyers, this is an opportunity period. Many builders now offer various incentives, including Rate Buydowns, and even waiving loan fees. If the budget fits and the school district is okay, the cost-performance ratio of new homes is actually higher than last year.
Another very important point—don’t make “home price fluctuations” your sole reason for buying.
If you are buying to live in it, what you should really focus on are the floor plan, location, structure, and whether the price fits your budget. A slightly lower interest rate is certainly good, but don’t forget, you are locking in not just a 30-day rate, but a home for 30 years.
Now, for sellers. In the current market, sellers “can sell, but cannot be unrealistic”. The number of listings is up, and buyers are negotiating more aggressively, so pricing strategy becomes crucial.
Don’t list your house using the peak prices from three months ago. The current guideline is: price slightly lower than your competitors, but slightly higher than market expectations. This can attract the most viewing traffic while still retaining room for negotiation.
Furthermore, sellers can also use some “small incentives,” such as offering a rate buydown, buyer closing cost credit, or a Home Warranty. Often, these small concessions can facilitate a sale more effectively than directly lowering the price by ten or twenty thousand dollars.
Another point: don’t be afraid to adjust the price early. If the house has been on the market for over 20 days without receiving a serious offer, it means the price is set too high. Today’s buyers are well-informed and act quickly; whoever prices their home closer to the market will sell more easily.
Looking at the bigger picture, when is a good time to sell?
Based on historical data, April to July is the peak sales season, followed by the autumn market from September to October. There is still some opportunity this autumn, but if you don’t have time to prepare, you can start doing some home organization or light renovations now and list next spring or early summer. Especially after the official start of the rate cut cycle, buyers’ purchasing power will return, and market heat might increase.
Therefore, I would suggest that if you plan to sell next year, you can start planning now. For example, replacing flooring, touch-up painting, updating the kitchen, and enhancing curb appeal—doing these preparations now is most cost-effective, allowing you to seize market opportunities directly next year. If you are unsure where to start, feel free to reach out to us anytime. We can help you create a complete listing plan based on your home’s condition, including timing advice and pricing strategy. We can also provide access to our partner contractors and other vendors to help get your house ready.
Overall, the market changes rapidly. The key isn’t predicting its direction, but adjusting our buying and selling strategies according to the current situation to seize opportunities.
🔗Reference
Federal Reserve | Monetary Policy https://www.federalreserve.gov/monetarypolicy.htm
CME Group | FedWatch Tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Freddie Mac | Primary Mortgage Market Survey (PMMS) https://www.freddiemac.com/pmms
Redfin Research Center | Housing Market Updates https://www.redfin.com/news/housing-market-update-prospective-homebuyers-back-away/
Zillow Research https://www.zillow.com/research/
King County Residential Market Stats ｜Northwest Multiple Listing Service (NWMLS) ｜Data Organization：Maggie Real Estate Group
U.S. Census Bureau & HUD | New Residential Sales https://www.census.gov/construction/nrs/index.html
National Association of Realtors (NAR) | Existing Home Sales Report https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
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