Homebuyer demand remains strong despite rising mortgage rates and shrinking listings, Zillow’s October market report found. 

Last month, homebuyer demand showed its resilience, despite mortgage rates being at a 23-year high and inventory continuing to be limited, with homes priced appropriately being purchased in record time. 

Zillow chief economist Skylar Olsen says as mortgage rates neared 8% in October, the U.S. housing market continues to cool, with inventory rising and appreciation decelerating. 

“As interest rates rose, some pent-up sellers appear to have been shaken free of waiting for rates to drop,” Olsen said. “New listings have nearly escaped the red annually and are trending out of a mortgage rate lock-induced hole. A record number of households in prime homebuying ages are providing buyers, despite the headwinds.” 

October mortgage rates were 8% at month’s end, pushing monthly payments up by more than 4% from September. And that average $1,991 monthly mortgage payment is almost 10% higher than it was a year ago and nearly double what it was in 2021. 

Home values on the rise

The national typical home value in October was $347,972, up 2.3% from a year earlier. October home values did fall 0.3% from September (compared to the 0.1% drop from August to September), showing “a slightly faster deceleration than pre-pandemic norms,” according to the report. 

In 40 of the top 50 markets, home values fell in October. 

Seattle home values rose 0.4% year over year to $704,655 but were down 0.5% from September.

Housing inventory ups and downs

Housing inventory last month was still depleted, as new listings fell 5% from September, a drop the report notes is actually smaller than seasonally expected. But, it also found inventory levels to be the lowest of any October since 2018. 

Total inventory was a different story last month as it climbed 2.6% from September, a result of “fewer sales and an unexpectedly small September dropoff in new listings,” Zillow said.  

New inventory in Seattle in October fell 15.5% from 2022, while total inventory dropped 28.5%.