Redfin reports big housing market news for homebuyers | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

As American homebuyers confront affordability concerns, according to the Federal Reserve, new data suggest that an intriguing trend is developing in the housing market.

First, it’s important to note that the 30-year fixed mortgage rate (FRM) average was reported as 6.19% on Dec. 4, according to Freddie Mac, down from a year ago when it averaged 6.69%. The 15-year FRM average came in at 5.44%.

Mortgage rates are expected to remain above 6% throughout 2025, Zillow predicted, also on Dec. 4.

Meanwhile, a significant development has been noted as starter-home sales increased 4.9% year-over-year in October 2025, real estate technology company Redfin revealed.

“Starter-home sales have been on an upward trend for more than a year, consistently outperforming the rest of the market through 2025 as buyers shift their focus to the most affordable homes available,” Redfin wrote.

But Redfin explained its view that the starter-home market news appears to involve some good news along with some bad news.

“The starter-home market is a double-edged sword right now. Conditions are improving, with more listings and steadier prices, but many buyers are only turning to this tier because they have been priced out of higher tiers,” said Redfin head of economic research Chen Zhao.

“That means sales at the low end of the market are relatively strong, but it also means that first-time buyers may find themselves competing with move-up or move-down buyers.”

Redfin reports starter-home buying activity

Sales of starter homes climbed 4.9% compared to last year, marking the 14th straight month of growth, according to Redfin.
Mid-tier home sales edged up 0.7%, while high-end properties posted a 0.8% increase.
The median price of starter homes rose 2% year over year, reaching $260,000 in October.
Active starter-home listings expanded 13% annually, bringing inventory to its highest October level since 2016.
San Francisco experienced the largest surge in starter-home sales at 19.5%, followed by Providence, R.I. at 13.0% and Portland, Ore. at 12.9%.
San Antonio registered the steepest drop at 9.6%, with Detroit down 7.9% and Nashville falling 5.5%.

How Redfin explains mortgage rate impact

Redfin divides U.S. homes into tiers based on prices of sold homes during a rolling 12-month period.

“This report focuses on homes whose sale price fell into the 5th–35th percentile, which we define as starter homes,” Redfin wrote. “We compare starter homes against mid-priced homes (35th–65th percentile) and high-priced homes (65th–95th percentile).”

“Mortgage rates staying below 6.5% over the past few months is also helping to fuel the uptick in sales across all tiers, with mid- and high-priced homes edging into positive territory after months of year-over-year declines,” the company added.

Starter-home prices are increasing at a significantly slow rate.

“The increase in starter-home sales is not causing prices to spike,” Redfin wrote.

“The typical U.S. starter home price rose a modest 2% year over year to $260,000 in October, the second slowest growth in the past decade — trailing only April 2024 (+1.8%), when mortgage rates were spiking above 7.5%.”

Inventory is keeping starter-home prices under control

Starter-home prices have seen a slight increase, partly driven by the greater availability of properties.

Listings for these homes climbed 13% compared with last year in October, bringing inventory to its highest October level in nearly a decade, since 2016.

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“That’s a notable shift for first-time buyers who have spent much of the past five years — and especially the pandemic era — competing over a limited pool of homes at the low end of the market,” Redfin explained.

Inventory expanded across other price categories as well, though at a slower pace. Listings for mid-range homes were up 9.5% compared with last year, reaching their highest October count since 2019. High-end properties saw an 8.3% increase, pushing supply to its strongest October level since 2020.

Redfin says homes linger on market

New starter-home listings rose just 0.5% year over year, while new listings fell 1.7% in the mid-priced tier and 1.3% in the high-priced tier.

This suggests that the bulk of inventory growth across all three price categories stems from properties staying on the market longer, rather than a sharp increase in new listings.

In October, the average starter home took 45 days to go under contract — seven days longer than the prior year. Mid-range homes showed a similar trend, also requiring 45 days, which was six days more than last year. Higher-priced homes had the longest timeline, averaging 49 days, up seven days compared with a year earlier.

“The slower pace of the market has really changed buyer behavior,” said Andrew Vallejo, a Redfin Premier real estate agent in Austin.

“People aren’t racing to waive contingencies or outbid ten other offers. If a starter home isn’t priced perfectly, it can sit for a bit, and buyers know that. They feel more comfortable negotiating because they’re not worried about losing the home in 24 hours.”