7.40 Percent: Too Few Homes, Too High a Rate, and What Builders Are Telling Us

Stephanie Biello

Good morning, and welcome back to Monday Market Updates. I am Stephanie Biello, associate broker with Kurfiss Sotheby’s International Realty, bringing you this week’s local real estate pulse.

Stephanie Biello

We are releasing a little later than usual today because the National Association of Home Builders dropped their October confidence report at 10 AM, and I wanted to be sure you heard the latest data right away.

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Let us start with two numbers: 7.4 percent, and 6.27 percent.

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Seven point four is where the Freddie Mac 30 year fixed mortgage average is sitting this week. Six point two seven is where we were one year ago.

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On a four hundred thousand dollar loan, that difference means principal and interest is roughly twenty four hundred and seventy dollars compared to twenty seven hundred and seventy dollars. That is three hundred dollars more every month for the exact same amount borrowed.

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That is the real story right now. It is not just about home prices; it is about affordability and monthly carry. And yet, inventory remains unusually tight.

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Nationally, existing home sales in September ran at an annualized pace of four million, matching August for the lowest pace of 2024. Higher borrowing costs have simply narrowed the pool of active buyers.

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Locally in the Philadelphia metro, Bright MLS reports that new pending sales dropped ten point eight percent from a year ago, marking the lowest September total since 2013, with showing volume down ten point five percent.

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At the same time, regional active listings are up nineteen point six percent year over year, well above the national five percent increase. But new listings were up less than one percent, meaning inventory is accumulating slightly, not surging.

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When you look across the individual counties, each area tells a different story.

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Chester County remains the fastest moving market in the region. Closed sales rose nine percent year over year, inventory stayed essentially flat, and the median days on market is just nine days. If you are shopping in Chester County, quality homes are moving quickly.

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Montgomery and Bucks Counties are also steady seller markets. Active inventory grew seventeen to twenty one percent, providing slightly more selection, but supply is around two months and median days on market are between ten and twelve.

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Delaware County shows a clearer shift toward balance. Closed sales were down sixteen percent, while active inventory rose twenty five percent, the largest jump in the suburbs. Homes are taking fourteen days on median to go under contract.

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Philadelphia County continues to offer the most buyer leverage. Active listings climbed seventeen percent to roughly fifty five hundred homes. Supply is up to four point nine months, with median days on market at twenty nine days. Buyers here have more room to negotiate.

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By property type, row homes and townhomes saw active listings jump twenty six point four percent to three point six months of supply. Single family detached homes remain tight at two point three months, while condo supply sits at three point seven months with the longest marketing times, averaging twenty five days.

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Now let’s turn to homebuilders. Having worked directly for builders earlier in my career, I can tell you firsthand: they are the true predictors of where the housing market is headed next.

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Builders are always first in, first out. They feel every shift in buyer traffic months before the resale market does, and they have to react immediately. When you’re carrying land loans, construction financing, and finished homes, waiting around simply isn't an option.

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That’s why this morning’s report matters so much. Builder sentiment just dropped to 29 in October—matching a 14-year low.

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To keep homes moving, 43 percent of builders slashed prices this month, with cuts averaging 6 percent. And 65 percent are actively offering buyer incentives like rate buydowns.

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Notice what they aren't doing: they aren't crossing their fingers and waiting for rates to fall. They are meeting buyers where they are right now.

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If you are buying this fall, here are two practical strategies to consider:

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First, shop by monthly payment, not purchase price alone. Know your target monthly number and work backward with your lender to determine your comfortable range at today’s rates.

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Second, take advantage of localized inventory. In areas like Philadelphia County or when considering townhomes, you have more options and room to ask for concessions. In Chester, Montgomery, or Bucks, be prepared to act with full mortgage approval in hand.

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For sellers, here is a playbook move directly inspired by builder strategies: look into offering an interest rate buydown.

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A buydown uses seller concession funds at closing to reduce the buyer’s interest rate and monthly payment, either temporarily for one to two years or permanently.

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If a buyer is stretching at 7.4 percent, a ten thousand dollar seller credit applied toward a rate buydown often creates a much bigger payment reduction than simply lowering the asking price by ten thousand dollars. Discuss this with your agent and mortgage professional to see if it makes sense for your listing.

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Beyond creative financing, basic fundamentals matter even more: competitive pricing, thorough preparation, and strong professional marketing. With showing traffic down overall, you want your listing to stand out from day one.

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To summarize: the market right now is about monthly affordability and local micro-markets. Builders are adapting, buyers can leverage higher inventory where available, and sellers who address the rate environment can gain a competitive edge.

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Next Monday, we will discuss what the Federal Reserve’s next policy decision could mean for mortgages. Rate expectations and Fed decisions do not always move mortgage rates in the direction people assume, and we will walk through that dynamic.

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One question to think about this week: if you compared your monthly payment at current rates versus one percent lower, would that change your timeline or target price?

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Thank you for tuning in to Monday Market Updates. I am Stephanie Biello, and I look forward to speaking with you next week.

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This podcast provides general market observations and does not constitute financial, legal, or tax advice. Consult with a qualified professional regarding your specific situation.