Buyers and sellers made October rather significant in terms of numbers. It reflected the strongest housing market in three years, according to a recent market report from Zillow. Improved affordability helped drive a rare fall surge in sellers both listing their homes and accepting offers from buyers, as both metrics were up 5 percent year-over-year to levels not seen in October since 2022, and both stayed flat from September instead of ticking down, as they typically do this time of year.

“Buyers and sellers both got some badly needed relief to perk up what is typically a slower season for the housing market. The reaction to lower rates shows that buyers are ready to make offers when affordability improves,” Zillow Senor Economist Kara Ng said. “While fall has been a ‘sneaky’ good market for buyers and sellers who stuck it out past the busy season, winter is coming, and it may bring rate volatility with it. This warm-up is not guaranteed to last." 

The average 30-year mortgage rate eased to 6.25 percent, reaching the lowest monthly average in more than a year. Home values stayed steady from last year, with the typical U.S. home value up 0.1 percent from last October to $362,117, according to the Zillow Home Value Index. Together those factors reduced mortgage payments by 1.8 percent compared to last October.

Paired with rising incomes, this improved affordability for new homebuyers to three-year highs, though costs are still a significant challenge. The median-earning household would spend 32.9 percent of its income on a mortgage on the typical home, given a 20 percent down payment.

Zillow noted that is the smallest share of income needed since August 2022. However, it’s still higher than the 30 percent threshold at which housing is considered a financial burden, and a 20 percent down payment is a serious hurdle at more than $72,000.

Sellers re-emerged in October after a sluggish summer, taking advantage of stronger demand and enjoying increased affordability themselves if they purchased another home. New listings picked up most compared to last year in Tampa, Fla., Raleigh, N.C., Orlando, Fla., Columbus, Ohio, Louisville, Ky., and Indianapolis.

Total inventory has risen 12.8 percent since last year and is 17.3 percent lower than 2018–2019 averages for this time of year. This is the smallest supply deficit since the pandemic began in March 2020 and a vast improvement over the 51 percent shortfall seen in February 2022, when the supply shortfall was largest.

“Buyers also responded quickly to the rate reprieve. Newly pending listings fell just 0.1 percent from September, but climbed 5 percent from a year earlier, signaling resilience in a month when demand typically tapers off,” Zillow said in the analysis. “The sharpest increases in newly pending sales were seen in Tampa, Boston, Orlando, Jacksonville and Miami, where activity rebounded from last year’s unusually slow conditions and ‘snowbird’ demand likely provided a boost.”

As the competition cools, it brought buyers markets to new frontiers. Zillow’s Market Heat Index shows competition among buyers is easing along seasonal lines and is far cooler than in past years.

The market is balanced on the national scale, but 19 major markets now favor buyers, three more markets than in September and up from nine last October. These are concentrated in the South, but cold weather and accumulating inventory are bringing them farther north and west; new additions in October were Cincinnati, Milwaukee and Birmingham, Ala.

Sellers retain the strongest edge in Hartford, Conn., San Francisco, Calif., New York, N.Y., San Jose, Calif. and Providence, R.I. while Miami Fla., Indianapolis, Ind., Milwaukee, Wisc., Pittsburgh, Pa. and New Orleans, La. rank among the country's strongest buyers markets.