Wealth Building Through Real Estate

## Mortgage Rate Environment

The weekly Primary Mortgage Market Survey® published by Freddie Mac on October 23 reported a notable decline in borrowing costs, with the average 30-year fixed-rate mortgage falling by eight basis points to 6.19%, and the 15-year fixed-rate mortgage likewise dropping eight basis points to 5.44% ([freddiemac.com](https://www.freddiemac.com/pmms/pmms_archives?utm_source=openai)). This marks the lowest level for the 30-year fixed rate in over a year, reflecting the Federal Reserve’s ongoing policy easing cycle aimed at bolstering a soft labor market and cooling persistent inflationary pressures.

Despite still-elevated rates compared to the historic lows seen during the pandemic, the current retreat in mortgage costs has begun to bolster housing affordability. At a 6.19% rate, a borrower financing a $300,000 home would see monthly principal and interest payments approximate $1,850, down from nearly $1,900 at rates above 6.3% earlier in October ([myhome.freddiemac.com](https://myhome.freddiemac.com/buying/mortgage-rates?utm_source=openai)). Lower rates can materially improve debt-service ratios for buyers and increase purchasing power, a key driver of long-term wealth accumulation through residential real estate.

## Sales Volume and Trends

According to the National Association of Realtors (NAR), U.S. existing home sales climbed by 1.5% in September to a seasonally adjusted annual rate of 4.06 million units, marking the strongest pace since February 2025 ([reuters.com](https://www.reuters.com/business/us-existing-home-sales-rise-seven-month-high-september-2025-10-23/?utm_source=openai)). Year-over-year, resales were up 4.1%, driven primarily by a combination of easing mortgage rates and modest improvements in seller concessions. Regionally, sales rose in the Northeast, South, and West, although the Midwest saw a slight downturn.

On the new-construction front, the U.S. Census Bureau and Department of Housing and Urban Development reported that new single-family home sales in August surged to an annualized pace of 800,000 units—20.5% above July’s pace and 15.4% higher than a year earlier—with for-sale inventory at 490,000 units ([census.gov](https://www.census.gov/construction/nrs/current/index.html?utm_source=openai)). While this data precedes our target week, it underscores the ongoing strength in builder activity, suggesting that supply constraints may ease gradually over the coming quarters, thereby diluting inflationary price pressures and supporting steady wealth creation for developers and long-term investors.

## Pricing and Affordability

Home price appreciation has moderated but remains firmly positive. The Federal Housing Finance Agency’s seasonally adjusted House Price Index recorded a 0.4% month-over-month increase in October, bringing the year-over-year gain to 4.5% ([nationalmortgagenews.com](https://www.nationalmortgagenews.com/news/home-prices-rise-in-october-says-fhfa-case-shiller?utm_source=openai)). This incremental growth, combined with softer mortgage rates, is slimming affordability gaps for marginal buyers, potentially coaxing more households into ownership—a cornerstone of long-term wealth building through property equity.

Redfin’s October 20 report highlighted that buyers are negotiating deeper discounts than seen since 2019, with homes on average selling for 1.4% below their final list prices in September ([redfin.com](https://www.redfin.com/news/press-releases/redfin-reports-homebuyers-are-scoring-the-biggest-autumn-discounts-since-2019/?utm_source=openai)). The average sale-to-list price ratio dipped to 98.6%, its lowest September reading in six years, indicating that motivated buyers are finding bargains even as supply remains tight. For investors focusing on rental properties, such markdowns can improve yield metrics by reducing acquisition costs, thus elevating long-term returns.

## Inventory and Market Dynamics

Redfin’s weekly housing-market tracker for the four weeks ending October 12 shows active listings at 1.205 million units, up 7.5% year-over-year, and new listings rising 4.1% to 89,756 units ([redfin.com](https://www.redfin.com/news/press-releases/new-listings-creep-up-as-would-be-homebuyers-back-off-haunted-by-high-prices-and-economic-unease/?utm_source=openai)). Pending sales declined 1.2% to 78,677, reflecting buyer caution amid lingering affordability headwinds. With the national months’ supply edging up to 4.5—which sits comfortably within the five-month threshold considered balanced—markets are showing signs of normalization compared to the more frenzied conditions of 2021–22.

However, inventory remains substantially below the 2010–19 average, a structural deficit that underpins steady price appreciation over time. Builders’ incentives—such as mortgage rate buydowns and closing-cost assistance—used in over 65% of new-home deals are helping to bridge affordability gaps while moderating list-price growth ([mckissock.com](https://www.mckissock.com/blog/appraisal/september-2025-housing-market-updates/?utm_source=openai)). For long-term investors, rising supply combined with strategic incentives presents opportunities to capitalize on price appreciations once broader economic stability returns.

## Building Long-Term Wealth Through Residential Real Estate

The current market dynamics—modestly declining mortgage rates, steady price appreciation, and a slowly expanding inventory—create a fertile environment for constructing long-term wealth portfolios centered on residential real estate. Key strategies include:

- **Purchase During Rate Downswings:** Timing acquisitions to coincide with dips in long-term mortgage rates, such as the recent 8 bp drop, enhances leverage and maximizes cash-flow potential.
- **Value-Add Renovations:** Acquiring properties at slight markdowns (home-sale discounts of 1.4%) allows for renovations that can drive rental rate growth, supporting both equity appreciation and higher yield.
- **Diversified Geographic Exposure:** With price growth ranging from 4% to 5% nationally, targeting emerging markets with stronger demographics or job-growth narratives can amplify returns.
- **Utilizing Tax Advantages:** Mortgage interest deductions and favorable capital gains treatment on primary residences bolster after-tax returns over multi-year holding periods.

While headwinds such as elevated construction costs and potential Fed policy shifts warrant vigilance, the fundamental drivers of residential real estate—population growth, limited supply, and the wealth-building power of home equity—remain robust. Investors who strategically navigate the current cycle, leveraging the latest rate and sales trends, are positioned to benefit from compounding returns and the inherent inflation hedge provided by real estate over the long term.