The Correction Will Get Even More Severe | Sept. 2026 Housing Market Update
BiggerPockets Real Estate Podcast
In this September 2026 housing market update, Dave Meyer analyzes the recent surge in mortgage rates and increasing housing inventory. The e
Key takeaways
- Mortgage rates have risen to approximately 7.2% due to increasing 10-year U.S. Treasury yields.
- Housing inventory saw a significant 4% month-over-month increase in August, signaling a shift toward a buyer's market.
Main topics
- Mortgage rate drivers and inflation
- Housing inventory and supply trends
Notable quotes
The bond market rules the world and the bond market is telling us that borrowing costs are going to be higher.
Conclusion
The housing market is entering a period of correction rather than a cr
Transcript preview
Speaker 1 (0:00) There are more homes for sale in the U.S. 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 is it 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. Speaker 1 (0:44) 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 is actually starting 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. It'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 U.S. 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 U.S. 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 U.S. government where investors lend their money to the U.S. 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, right? So that's driving up inflation. We also have tariffs, which are inflationary, contributing to inflation. That's not what's causing this acute spike in mortgage rates, but it plays a role. And the last thing just is the national deficit, right? We have this massive national deficit, and bond investors are worried that to pay off that deficit, the government's just going to print a lot of money, which will cause more inflation. And so I know this is sort of big macro stuff. It's not as directly related to real estate. But the reason I am telling you this is because if you want to know, are mortgage rates going to go down? You have to ask yourself this question. Is inflation going down? I hope yes, but there is no end in sight to the war in Iran. tariffs have been up and down, and I think they're just going to remain volatile for a while. The national deficit, there's no chance we're getting that under control anytime soon. And so if you ask me, I don't think mortgage rates are coming down anytime soon because I don't see inflation getting any better. Now, the Fed is probably going to raise rates over the next couple of months a couple of times. That could help a little bit. But I do think until the energy shock that we're going through, gets better, we're not going to see inflation come down in a meaningful way. So my outlook for mortgage rates going into the end of 2026 is that they're going to stay near 7%. Hopefully, they'll come back down to the high sixes. I actually think that's probably the most likely. But are they getting below 6.75? Probably not. Right. So this is, I know, frustrating. Everyone wants mortgage rates to come down, but it is not unexpected. I've been saying this for years. I've done tons of episodes on this podcast, on the On The Market podcast, saying mortgage rates are unlikely to come down. Because if you study this, it's kind of obvious that this was going to happen. I think it's just that a lot of people in our industry have been wanting mortgage rates to come down and saying that they're going to come down because they feel like it's an inevitability. Because they went up so quickly that, of course, they have to come back down. That's not really how it works. The bond market rules the world and the bond market is telling us that borrowing costs are going to be higher across the entire economy and mortgages and real estate are not exempt from that. So for investors, you got to plan on higher rates.