The Correction Will Get Even More Severe | Sept. 2026 Housing Market Update

Dave Meyer (0:00)

There are more homes for sale in the US right now than at any point since 2020, and mortgage rates are near 7% with no relief in sight. Are these signs of an impending crash or isn't an opportunity to stock up on properties at a discount? On this BiggerPockets September housing market update, we're digging into the big changes we've seen to the housing market in recent weeks, and things have definitely changed. So, I'm going to explain where the risks lie and how savvy investors can use these new market dynamics to build a bulletproof portfolio for the years to come.

Hey, everyone. Welcome to BiggerPockets. I'm Dave Meyer, Chief Investment Officer, Housing Market Analyst, and Real Estate Investor for more than 16 years. Today, we have our monthly housing market update. And I do this every month, go through the numbers, the recent data to keep you up to date. But this one, September, feels a little bit different, to be honest, because for most of 2026, the story has been kind of that nothing has happened. We're in the great stall. Things have varied a little bit, but we've had the same big picture story. Rates have sort of stayed in this band. Inventory is sort of grinding away. It's not really moving that much. Prices are creeping up slowly, and kind of it's been boring. But August broke that pattern in a couple of places that we need to talk about, and the market has actually started to change a little bit faster. And I think we're getting a very clear signal for the first time in a while on where the market is going for at least the rest of the year for 2026, and maybe even for the next couple of years. So we're going to hit on a few big stories. First, we definitely need to talk about mortgage rates. They've shot up, as you know, and this matters a lot, but we got to talk about why they're going up and where they're going to go.

Secondly, we're talking inventory and a surge in supply and how that can be either a very good or very bad thing for investors, depending on your individual approach. And I'm going to share some regional housing data because, of course, there's only so much we can learn from national data. And we'll talk about different regional events and how inventory and pricing are trending around the country. Lastly, if we're talking about rising mortgage rates and increasing supply, we got to talk about risk because those are two of the things that can bring prices down in the housing market. And so we're going to end the show with the risk report. That's something we do every month here on the housing market updates. So that's the plan for the show.

One quick thing before we start, if you get value out of these monthly updates, don't forget to hit subscribe. I am terrible at remembering to ask, but today I remembered, so do me a favor and subscribe. With that, let's get to our housing market update. First up, we're talking about mortgage rates. Big picture here, rates have gone up a lot over the course of the year. They're now hovering above 7% as of this recording, recording right in the middle of September. They are about 7.2%, the highest they have been in over a year. Now, you'll remember, about two years ago, we were getting mortgage rates briefly in the eights, but starting at the beginning of this year, we were closer to six. We were at about 6.1%, so we've seen a significant increase in mortgage rates over this year.

And the reason they're going up so quickly is really important because it tells us whether they're going to go back down or if this is something we just need to get used to. So what is driving up mortgage rates? The short answer is yields, treasury yields. You might have seen that the yield on a 10-year US treasury is now above 5%. This is the highest it has been in quite a while. 30-year treasuries, highest point they've been in 30 years. And the reason this matters is that mortgage rates are directly tied to the yield on a 10-year US treasury, not what the Fed does. If you're not familiar with what a treasury is, it's just a bond. It is a bond issued by the US government where investors lend their money to the US government. And the yield is how much interest or the interest rate the government pays to those investors. So right now, if you wanted to lend the government money for 10 years, you would get a 5% annual return. That's what a five-year yield means. And this is notable because it's gone up a lot. And what has driven these yields up and therefore taken mortgage rates up with them is basically just inflation. Now, inflation is caused by a lot of things, but the primary thing that's happened this year is the war in Iran. There's no end in sight. It's causing energy shocks. It's causing increasing fertilizer prices, which is increasing food costs. Diesel is at the highest it's been on record, which increases the cost of everything that goes on a ship, which is everything.