The October housing market was a picture of contradiction. Much-anticipated rate cuts encourage buyers to return to the market, while ongoing affordability challenges and the federal government shutdown suggest the need for caution. The October Fed meeting brought the second consecutive rate cut, but mortgage rates remained widely stable. Although the available home inventory and buyer interest are encouraging signs, the time on the market and uncertainty surrounding government loans signal buyer hesitation.
Buyers entering the market have big choices to make. While there is another Federal Reserve meeting scheduled for December, there are no guarantees that change will move in the right direction. Preparation could pay off in significant interest savings for prospective buyers who already have a loan prequalification and a reasonable down payment.
Mortgage Rates Remain at Annual Lows
October’s Federal Reserve meeting dropped rates by a quarter percentage point for the second straight meeting. However, the cut was widely anticipated and already reflected in mortgage rates. Rates have fluctuated from week to week and are currently settled at 6.22% for a 30-year fixed-rate mortgage, near annual lows.
The real news from the Fed meeting centers on predictions for moving forward with limited information and a rapidly changing job market. While an additional rate cut was previously expected in December, comments from Fed Chair Jerome Powell bring new concerns. Powell warned that “a further reduction in the policy rate at the December meeting is not a foregone conclusion,” and compared creating policies with limited economic information due to the government shutdown to driving in the fog. Although the potential for another quarter-point cut still exists, Powell hinted that the lack of data could be an indication to slow down.
For homebuyers, the meeting brings more uncertainty than relief, serving as a reminder that rates alone shouldn’t guide the decision on whether to enter the market. Buyers who are financially prepared to make a purchase can save thousands in interest over the life of their loan in comparison to rates that peaked above 7% early in the year. However, planning for continued rate drops in the coming months is a gamble that could lead to disappointment.
Growing Home Inventory Gives Buyers More Choices
While there are about 1.1 million homes for sale, active inventory is growing faster than new listings. Fewer homeowners put their properties on the market in late October and early November, and homes are lingering on the market for an average of 63 days. The slowing flow of new listings isn’t necessarily bad news for buyers, as it offers time to compare available listings and can encourage price cuts from sellers eager to gain buyer interest.
Regional disparities make national trends irrelevant for some buyers, as local market inventory can vary dramatically. At the end of October, 17 states were above pre-pandemic inventory levels. Many of these states are popular retirement destinations, including Arizona, Florida, North Carolina, Texas, Hawaii, and Utah. However, several states in the Northeast and Midwest are lagging, including Maine, Massachusetts, New York, and Virginia.
Home Prices Remain Flat
The national median list price is $424,200, which is only 0.7% lower per square foot than it was at this time last year. While price drops are modest, they have dropped for nine consecutive weeks. Since supply and demand primarily control home prices, prices vary by location. For example, home prices are falling in the South and West, with Texas and Florida seeing some of the most significant declines. Yet, prices are increasing in the Northeast and Midwest, where inventory remains tight.
Metros with the largest year-over-year median price increases in the third quarter include:
- St. Louis, MO
- Trenton, NJ
- Lansing, MI
- New Haven–Milford, CT
- New York-Jersey City-White Plains, NY–NJ
55+ Homebuying in an Uncertain Economy
All eyes have been on mortgage rates and home prices in anticipation of changes. While these numbers remain broadly stable, the government shutdown has the potential to impact the homebuying process for some buyers directly. Government-backed loans offer buyer-friendly terms, including lower down payments and more relaxed credit score requirements. While it’s still possible to obtain a loan from agencies like the FHA and VA, processing times and closing dates can be delayed. Buyers counting on a USDA loan must postpone entirely, as there is a complete suspension of any new USDA loans. Unfortunately, the delays won’t magically disappear when the government reopens. With requests piling up and many federal offices operating with reduced staff, backlogs could take weeks to clear.
Homeowners prepared to enter the market with preapproval for a government-backed loan may need to consider their financing options and adjust long-term budget plans.
Analyze Your Budget and Credit Score
Conventional loans (including Fannie Mae and Freddie Mac) remain largely unaffected by the shutdown. An analysis of your budget and credit score will help you determine if you’re eligible for another loan. Buyers can qualify for Fannie Mae and Freddie Mac loans with a down payment as low as 3% and a 620 credit score.
Inquire About Shutdown Contingencies
Sellers, real estate agents, and lenders are aware of the shutdown’s impact on specific types of loans. Some offer to mitigate these issues for both buyers and sellers with contract clauses that allow extra time if a lapse in federal services delays a deal. If your purchase is dependent on a government-backed loan or flood insurance from the National Flood Insurance Program, requesting such contingencies could prevent missed deadlines.
Assistance for 55+ Homebuyers
High mortgage rates have accelerated the number of all-cash sales, with roughly one-third of home sales in the first half of 2025 paid for with cash. While many 55+ homebuyers use cash from the sale of their current home for a down payment on a retirement home, you may not be in the position to handle an all-cash payment.
A Home Equity Conversion Mortgage (HECM) insured by the FHA allows buyers who are 62 and older to use their assets for a larger down payment and the home’s equity as collateral for the loan. As a home equity loan, the mortgage requires no monthly payments, and the house can be passed down to heirs.
Eligibility requirements include:
- Borrowers must be 62 or older
- The home must be your primary residence
- Property must be a single-family home or an FHA-approved condo
- Minimal credit and property requirements also apply
While some aspects of FHA loans may be delayed due to the government shutdown, the loans remain available.
Finding Your Dream Retirement Home Despite Uncertain Times
While 2025 has brought numerous challenges for homebuyers, homeownership is not out of reach for retirees. Decreases in mortgage rates offer cost savings for borrowers, and increased inventory in various regions gives buyers more properties to choose from.
55+ homebuyers can increase their buying power even further by considering homes or condos in age-restricted communities. These neighborhoods offer resort-style amenities and minimal maintenance requirements. If you need help finding the best community for you, 55places can help. Reach out today to learn more.
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