Mortgage Rates: We’ve Had Worse - Home Prices are Stable, Payments are Volatile

For Buyers

In Short

• Mortgage rates jumped from around 6.75% to 7.24% in under two weeks on anticipation of a Fed rate hike, and it's the speed of the move that's spooked buyers more than the rate itself.
• Not enough to price most buyers out, but enough to make them pause and wait for the rate to settle.
• No crash signals for 2026. Home values held steady in 2023 and 2024 with similar or higher rates, though demand may cool if this volatility continues.
• Nearly 6 in 10 August sales included a seller-paid incentive like closing costs or a rate buydown, with sellers covering just over $10,000 on average, most common in the $350,000-$400,000 range.
• Q4 is typically the strongest season for Phoenix buyers, and incentives should keep climbing as builders and sellers compete for buyers still on the sidelines.

The best description for the housing market vibe this month is disappointment. Average mortgage rates are front and center again, and not in a good way.

Home values didn’t crash in 2023 or 2024 when rates were routinely over 7.25%, and market indicators do not support a crash in 2026. However, they may glide with less demand.

Ironically, it’s not the rate itself that has caused such a sharp pause in buyer activity, because more homes sold in previous years with the same or higher rates. It’s the volatility of the rate. Buyers typically pause when the rate is actively rising or actively falling, waiting for it to find stability.

This pause provides a window of opportunity for those buyers who can shoulder a higher payment temporarily and negotiate a better deal on the price or terms of their purchase. When rates decline again, they may refinance their home and enjoy a lower payment.

For Sellers

In Short

• Higher rates aren't new, and the strategies that have worked for sellers the last three years are still working. Just budget for longer marketing times.
• October usually brings a wave of new listings, especially in luxury and retirement communities, but more listings on the market doesn't always mean more buyers showing up.
• Pricing right matters more the longer a home sits: homes under contract within 15 days average 99% of asking price, that drops to 95% at 1-2 months on market, and 90% at 3-4 months.
• August closings dipped 6.3% year-over-year, the first month in 2026 where sales trailed 2025.

It’s not uncommon to see a median of 50-60 days on market prior to an accepted contract in the 4th quarter.

October is a very popular month for new listings, especially in luxury and retirement communities as the temperatures drop, but it doesn’t always coincide with a boost in demand.

Buyers have consistently negotiated around 97-97.5% of the last list price for nearly 2 years, so the closer sellers can get to where the buyers believe the price should be, the faster they will get a contract close to asking price.