Headed Into the Home Stretch

How are we doing at this point as we end Q’3’2025, and what lies ahead for the remained of the year?

Our local area market has experienced a weakening in demand this year. Currently, the 16,839 active listings reflect an 8.5% increase over last year at this time. A significant number although not as many as in June when they peaked at 18,146. Part of the reason for the slight drop in active listings is that some sellers decided to de-list properties that were not selling. Our pending contracts also decreased 3.8% year over year, another sign of less home buyer demand. The combination of high inventory levels and lower numbers of pending contracts have put more pressure on prices.

How we measure the market is by looking at leading indicators. One is the activity index, currently at 19.53%. It reflects the absorption rate (pending contracts) as a percentage all active listings (active + pending). An activity index of 25% or more would help reduce inventory and create a more balanced market between buyers and sellers. Another leading indicator is the new listing to pending ratio which shows how many homes are coming on the market (new listings), and how many are leaving the market (under contract).

Our current ratio at .68 shows we’re building tangible levels of inventory.
* Below 0.50 – very cold, buyer-dominant market.
* 0.50–0.60 – substantial inventory growth, strong buyer advantage.
* 0.60–0.70 – tangible inventory growth, still buyer-favored.
* 0.70–0.85 – neutral zone, balance between buyers and sellers.
* 0.85–1.00 – leaning seller-friendly, absorption catching up to new supply.
* 1.00–1.10 – seller’s market, tighter conditions.
* Above 1.10 – strong seller’s market, hot with rapid absorption.

The question is then why are list prices still so high? There’s definitely a disconnect between list and sold numbers. Sellers continue to push high list prices, and buyers are negotiating steep sold price discounts. The sold to list price ratio for Sept is 96.77 of final list price, but only 91.58% of original list price. This is an environment that is favorable to buyers. And a cautionary sign for sellers. See the charts of sold and active listings having had at least one price decrease. 

Where we go from here is certainly not clear. While the Feds recently lowered the overnight lending rate, mortgage rates align more closely to bond yields. Economic reports just came in stronger than expected sending bond prices down and bond yields up, leading to higher mortgage rates, even if only slightly.
But the current economic picture if it holds, gives the Federal Reserve leeway to keep rates where they are and not cut rates further at their next meeting.

Going forward that will impact both buyers and sellers. Those buyers on the sidelines till “rates go lower” may be on the bench for a while. Sellers need to understand that current costs of ownership will impact a buyer’s affordability. The key to moving property is competitive pricing and pristine conditions.