Housing Market Update: 7% Mortgages and Record Seller Concessions

Twelve days ago the Federal Reserve raised interest rates. Not cut. Raised. Four days ago the 30 year mortgage crossed 7% for the first time in about 20 months. And this morning the July home price data landed. Every housing video you watched this year that was built on the idea that rates are coming down is now running on a premise that died on September 16. In this article I walk through what actually changed, what the numbers say, and the four numbers that prove this is not 2008 no matter what anybody tells you.

The Fed raised rates, and it is not done

Let me clear something up, because a lot of people are still talking like the Fed is cutting. It is not. It held steady, it was cutting before that, and now it is raising. On September 16 the Fed hiked by 25 basis points to a range of 3.75% to 4.00%. The vote was 12 to 0. That was the first increase since 2023.

Here is the part that matters more. 16 of the 19 policymakers in that room said they expect at least one more hike before the end of the year. Kevin Warsh, the chair of the Fed, has said inflation is too high and has been for too long. I am recording everything these officials say, and the message is the same. They are most likely going higher. The next meeting is October 28.

I know the president is not happy about it. I also had people tell me the Fed needs to take rates to zero. The fact is inflation is out of control. I paid $4.39 a gallon for gas in central Pennsylvania, and diesel for my van was $6.59. Tell me what you are paying where you are. That is why the Fed is doing what it is doing.

Mortgage rates crossed 7%

For the first time in about 20 months, the Freddie Mac 30 year fixed rate came in at 7.03% this week. Last week it was 6.95%. A year ago it was 6.30%. The 15 year fixed is 6.42%, up from 6.26%. Depending on the tracker you look at, the 30 year is anywhere from 7.03% to 7.2%.

I will tell you my own story here. I have a mortgage at 6.9% on one of my real estate investments and a 20 year at 6.99% on another. I was going to refinance. The rule I have always been told is that 50 basis points lower is worth considering, and a full 1% lower means you get in there and do it. We got down to 6.3%, and I was waiting for 5.99% or lower. It never happened. Now I am stuck, and I am probably stuck for a few years.

Why does this matter to you? Because your mortgage does not track the Fed. It tracks the 10 year Treasury. As the 10 year goes, your rate goes. Keep your eye on that number, not the Fed headline.

The home price data and the trap inside it

At 9 a.m. today the July home price data landed, both the Case Shiller index and the federal housing index in the same hour. The last reading was a 1.5% national gain year over year for June. The 20 city index was up 2.1%. Cotality already published its own July number at 1.4% nationally.

Here is what almost nobody will say out loud about this number. Case Shiller is a three month rolling average with a two month lag. The July figure reflects sales that closed roughly May through July. Those buyers locked in rates below 7%. The 7% mortgage is not in this print at all. Whatever it says, the damage from the last two weeks has not shown up yet. It is going to get worse before it gets better when it comes to these numbers.

There is also a nine point gap between the best big city and the worst. Chicago was the strongest big city in America on the last reading at plus 6.9%. New York was up 4.8% and Cleveland up 4.1%. Seattle was the weakest of the 20 cities at minus 2.0%, with Las Vegas at minus 1.9% and Denver at minus 1.2%. Nine full percentage points between Chicago and Seattle, same country, same month.

That is why I say there is no national housing market. There are about 400 of them, and they are moving in opposite directions. Anyone telling you prices are crashing across America is describing about one third of the country, not all of it.

Your home went up in dollars and down in value

Home prices are falling, just not in dollars. Stay with me here. June inflation ran 3.5%. That is roughly two percentage points above the 1.5% home price gain. If your house went up 1.5% and inflation is 3.5%, your house has to go up by that same 3.5% just to hold its value. Anything under that is a loss in purchasing power.

It is the same as a raise at work. If you get a 1.5% raise and inflation is 3%, you cannot buy everything you bought last year. You lost purchasing power even though the number went up. The Fed’s own projection for 2026 inflation is roughly 3.7%. So your house went up 1.5% in nominal dollars while inflation ran close to 4%. Your home went up in dollars and down in purchasing power at the same time. Tell me in the comments if you realized that.

Sellers are paying buyers at a record rate

This is the one almost nobody is covering. 44.7% of all home sales in August included a seller concession. That is the highest August share in at least the last six years. Remember when people were fighting over homes? I had to do it myself. That is over. And 15.8% of sales got both a price cut and a concession. That is a record for any August.

In Atlanta, nearly three out of every four sellers paid something to get the deal done, at 72.8%. Charlotte was second at 67.9%. Phoenix had the biggest jump anywhere, up more than 15 points from a year ago to 67.4%. On the other end of the country, San Jose was only about 4%, and New York was under 6%. Some places are still holding up.

A concession is the seller handing money back at closing to cover your rate buydown, your closing costs or your repairs. When almost half of sellers are doing it, the listed price is not the real price anymore. Do I believe they are done? I do not. I believe it gets worse for at least a short period.

Builders are cutting prices and it is working

About 66% of builders are offering some form of buyer incentive to move inventory, and 38% are cutting prices outright, not just adding incentives. Builder confidence is at a twelve month low. Think about it. Rates just jumped over the last couple of weeks, and builders have to sell brand new homes. The only way to do that is to give more.

And it is working. New home sales ran at a 684,000 annualized pace in August, up about 6% on the month, while existing home sales fell. The builder can cut the price, buy down your rate and throw in the appliances. Your neighbor trying to sell the house next door cannot do that. That is why new homes are going up and existing homes are dropping. That is the whole housing market in one sentence.

Deals are falling through at a five year high

This is the freshest data in the whole video. About 12% of June contracts still had not closed by the 60 day mark in August. That is the highest August share in five years. Closed sales in August versus a year ago were down 16% in Houston, down 12% in Seattle and down 9% in Dallas. Nationally they were down 5%.

Existing home sales are running at a 3.98 million annualized pace, back below 4 million, with a median price of $429,100, 4.9 months of supply and 31 days on market.

I will be honest. When I see this kind of data, it is scary if you invest in real estate. I have quite a bit in real estate, just under what I have in the stock market. So I am a little nervous. But real estate is a long term, very illiquid investment. I go into it knowing that.

It is not the mortgage, it is everything around it

Escrow costs, meaning the property tax and insurance piece of your payment, are up about 45% nationally in five years. Colorado is up about 77%, Florida about 70%. In some states escrow is nearly half the monthly payment. Across the 450 largest metros, taxes and insurance average about 21% of the payment.

It is showing up in who stops paying. The states with the fastest rising tax and insurance costs are the same states seeing delinquency spikes. People are not defaulting on the mortgage. They are defaulting on the escrow. That is why a rate drop would not fix this by itself. You can refinance a rate. You cannot refinance your property tax bill or your insurance premium.

Four numbers that prove this is not 2008

• $310,000. The average homeowner’s equity, up another $6,000 in the quarter. Total mortgaged equity is $17.9 trillion.
• 2.1%. The share of mortgages that are underwater. In 2011 it was roughly one in four.
• 44%. The average loan to value across all mortgaged homes. People own more than half their houses outright.
• 1 in 3,569. Housing units with a foreclosure filing in August. In 2008 and 2009 the monthly filings ran in the hundreds of thousands.

Here is the honest part. Completed foreclosures are up 42% on the year at 5,794 in August. That is a real increase off a very small base, concentrated in the South. South Carolina is the worst state at one in 1,547 homes, then Nevada, Florida, Texas and Maryland. The worst metro in America is Columbia, South Carolina. I feel bad for the people out there. But if somebody tells you a foreclosure tsunami is coming, ask them for the filing count. It is a rising number off a historically tiny base, and it is not a wave.

Now combine that equity number with something else. Once rates get low enough that people can sell or refinance, you are going to see an obscene amount of people doing it. That is $17.9 trillion, and by then probably $20 trillion, of trapped equity. A lot of it moves into the stock market and into businesses, and people spend it. It is one of the biggest trapped piles of cash in the country, and when it unlocks the markets are going to explode. That is my opinion.

Are you stuck at your place? I am. I have a property with no mortgage and I wanted to pull money out of it to buy another property. I cannot do it, because I do not want a 7 point something percent mortgage. So I wait. Let me know if you are in the same spot.

Why every source gives you a different number

Take a screenshot of this part. Case Shiller 20 city for June is plus 2.1%. It compares the same house to itself on a three month average with a two month lag. Cotality’s July index is plus 1.4% nationally, with a different method and one month fresher. Zillow’s home value index through August is plus 1.3%, and it has 54 of the 300 largest metros negative. Realtor.com’s asking price per square foot in August is minus 1.8%, the tenth straight monthly decline, with 36 of the 50 biggest metros falling.

Sale prices versus asking prices. Same house versus all houses. Different months, different lags, different samples. None of them are lying. And here is the trap: Austin is down 8.1% year over year on asking price and down 27.6% from its 2022 peak. Those are two completely different numbers. When four sources give you four answers, the move is to say which one you are quoting and why. That is the difference between reporting and guessing.

Keep reading on Stock Moe

• Mortgage Rates Hit 7.50%: 54 Cities Falling, No Crash Yet
• My 10 Year Mortgage Rate Forecast: 6.6% in 2027, 6.1% by 2031
• Housing Market Update: The Fed Raised Rates, So Why Did Mortgage Rates Drop?

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Sources

• Federal Reserve FOMC statement and projections, September 16, 2026
• Freddie Mac Primary Mortgage Market Survey, week of September 25, 2026
• S&P Cotality Case Shiller Home Price Index, June and July 2026 data
• Cotality July home price index and Q2 2026 home equity report
• Redfin seller concessions report, August 2026 data, published September 18, 2026
• NAHB Wells Fargo Housing Market Index, September 2026
• Census Bureau new residential sales, August 2026
• National Association of Realtors existing home sales, August 2026
• Zillow Home Value Index through August 2026 and Realtor.com August 2026 report
• Cotality escrow analysis and Neighbors Bank metro analysis
• ATTOM foreclosure report, August 2026

I am not a financial advisor and nothing in this article is financial advice. Everything here is my own opinion, for educational and entertainment purposes only. Do your own research and talk to a licensed professional before you make any financial decision.