October 2026 Housing Market Update: What 7% rates means for housing
A lot has changed since our last market update. The Fed raised rates, mortgage rates popped above 7%, and the 10-year Treasury yield hovered around 5%. Naturally, these shifts are causing ripples across the real estate market.
In this October market update, Danny Brown, CEO of Myriad Real Estate Group, breaks down what higher interest rates mean for local inventory, why this shift presents a golden opportunity for buyers, and how sellers can position themselves to win in today's changing environment.
Phoenix Inventory & Fall Seasonality
Inventory in the Phoenix area is up by about 1,000 homes. While that might sound like a major surge, it is actually right in line with normal fall seasonality.
In Phoenix, autumn is typically the second best time of year to sell a home. Kids are back in school, and the weather finally cools down into the low 70s, which gives everyone a reason to get out and start house hunting. Sellers and agents know this, which brings a natural wave of new listings to the market.
At the same time, higher interest rates are causing existing homes to stay on the market longer. When homes take longer to sell and new listings continue to roll in, total inventory naturally builds up.
Mortgage Rates & The 6.5% Threshold
Mortgage rates recently climbed back above 7%, hovering in the mid-to-high 7% range.
In real estate, 6.5% acts as a critical line in the sand:
Below 6.5%: The market is more fluid. While activity may still be somewhat depressed, people are actively buying and selling.
Above 6.5%: Market activity slows significantly. Buyer activity drops, transactions take longer, and overall market velocity cools off due to affordability challenges.
What’s Driving the Rates?
Mortgage rates are closely tied to the 10-year Treasury yield, which currently moves in lockstep with global oil prices:
Rising oil prices push the 10-year Treasury yield up, which drives mortgage rates higher.
Falling oil prices pull the 10-year Treasury yield down, helping mortgage rates ease.
Because rates are currently dictated by broader global events, focusing strictly on rate predictions can distract from the immediate opportunities in the local market.
Why It’s a Great Time for Buyers
If you are looking to buy a home right now, ignore the headline interest rate and focus on your monthly payment. If a home fits your monthly budget, today's market offers massive advantages that buyers haven't seen in years.
When rates are higher, seller concessions increase dramatically. In fact, a higher-rate environment is often much more favorable for buyers than a 3% rate market:
| Market Environment | Buyer Competition | Seller Concessions & Negotiations |
|---|---|---|
| High Interest Rates (Today) | Lower competition, smaller buyer pool | Sellers pay closing costs, fund rate buy-downs, complete repairs, and accept lower offers. |
| Low Interest Rates (~3%) | High competition, record low inventory | Buyers must bring tens of thousands of dollars in cash above list price with zero concessions. |
You can't have it both ways; low rates and a buyer-friendly market simply don't happen simultaneously. In today’s market, sellers are far more willing to negotiate. Myriad recently represented a buyer who successfully secured 6% in seller-paid closing cost assistance, which is a deal that no seller would have entertained just a few months ago.
What Sellers Need to Expect
With fewer active buyers in the market, sellers need to adjust their strategy and expectations:
Expect Longer Days on Market: Higher rates push some buyers to the sidelines, shrinking the overall buyer pool.
Be Open to Offers: When an offer comes in, take it seriously. Pushing back too aggressively in negotiations can easily send a buyer straight to a competing property with a more flexible seller.
Focus on Pre-Listing Improvements: Today’s buyers have options, and very few have the extra capital or desire to tackle renovations right after closing.
Do Pre-Listing Upgrades Pay Off?
Yes. Standard, neutral upgrades such as fresh paint, updated flooring, and clean landscaping make a major difference.
When you complete repairs or updates before listing, the buyer can finance the value of those improvements into their mortgage. If you leave the work for the buyer, they have to pay out-of-pocket after closing, which turns many buyers away entirely. Making your home turn-key helps it sell faster and for top dollar.
Selling & Buying: Looking at the Total Transaction
If you are planning to sell your current home and buy another, don't look at the sale of your existing house in isolation. Look at the real estate move in its totality.
In a softer market:
You might accept 5% to 10% less on the home you are selling.
However, you can then leverage the buyer's market to negotiate 10% to 15% off the purchase price of your next, higher-priced home.
By negotiating effectively on the purchase side, you come out ahead on the overall transition.
Have Questions About Your Home or Neighborhood?
Whether you are looking to buy, sell, or simply want to know what your home is worth in today's Phoenix market, reach out to the Myriad Real Estate Group team today. We are here to help you make your next move with confidence.