The housing market’s fall surprise: Buyers are back, and Zillow says the momentum isn’t over yet

Zillow's September 2025 housing market report reveals an unexpected surge in activity, driven by a dip in 30-year fixed mortgage rates to 6.19% and a strong stock market. New listings climbed 3% year-over-year, and existing-home sales reached a seven-month high, indicating a thawing market rather than overheating. This shift has resulted in 15 of the 50 largest metros becoming buyer's markets, with Zillow economists projecting continued unseasonably active conditions into the holidays due to easing borrowing costs and pent-up demand.

Analysis

Zillow's September 2025 housing market report indicates an unexpected surge in activity, driven primarily by a significant dip in mortgage rates and a robust stock market. The average 30-year fixed mortgage rate fell to 6.19%, marking its lowest point of 2025, which has reignited both buyer and seller engagement after a sluggish August. This positive inflection point suggests a potential shift in market momentum.

Key metrics reinforce this resurgence: new listings climbed 3% year-over-year in September, reversing the prior month's 3% decline, and existing-home sales reached a seven-month high. The market is also rebalancing, with 15 of the 50 largest metros now classified as buyer's markets, a notable increase from six last year, indicating a shift in power dynamics.

Despite 15% of pending sales cancellations, Redfin data shows sellers are adjusting expectations through price cuts, contributing to a thawing market rather than overheating. Zillow economists anticipate this "unseasonably active" fall will extend into the holiday season, supported by continued easing borrowing costs and pent-up demand, presenting a potential opening for buyers who have been on the sidelines.

Key Decisions for Investors

• Monitor interest rate trends closely, as the current dip in mortgage rates to 6.19% is a key driver for renewed housing activity, and sustained low rates would continue to support market recovery and related equities.
• Evaluate regional market dynamics, noting the increase to 15 buyer's markets among the largest metros, which suggests a need for granular analysis of specific geographic exposures within real estate portfolios.
• Consider re-evaluating exposure to housing market bellwethers like Zillow (Z, ZG) given the optimistic outlook and projected "unseasonably active" fall, while closely monitoring Redfin (RDFN) for impacts from seller adjustments and transaction cancellations.