A listing agent friend texted me this week asking for some thoughts on the market, and I said the following. I think right now it’s about price discovery, and sellers are having to lower the price to find out what the market is willing to pay. So, let’s talk about price discovery, demand destruction, and what we’re seeing in the pendings right now (yes, there are still homes getting into contract). I wasn’t going to write this week due to just getting back from vacation, but there was too much to talk about.
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UPCOMING SPEAKING GIGS:
10/21/26 Coldwell Banker Sierra Oaks / EDH
11/17/26 Orangevale MLS Meeting
11/19/26 Appraiser webinar TBA
1/15/27 PCAR
1/26/27 Residential Roundup
MY NEW YORK VACATION
I took the last week off, and it was so nice to get away. My wife and I have really fallen in love with New York City. Growing up it was always about beaches for me, but in recent years I’ve been enjoying urban environments for trips. Give me ten miles to walk every day and explore, and I’ll be one happy man. Here’s a 37-second recap of our trip. I brought my skateboard this time too, which was an incredible game-changer for exploration. And shout out to Jonathan Miller. It was great to grab tea.
PRICE DISCOVERY IS THE NAME OF THE GAME
Sellers are having to lower the price to figure out where the market is at right now. Being that affordability has eroded more due to higher rates, there is a sense of having to test the market to find that sweet spot where buyers will bite. My advice? Price reasonably, be willing to lower the price if the market requires, and don’t come out of the gate too high. I’m a big fan of pricing toward the lower end of a reasonable range rather than trying to test the market at the very highest level. And remember, uncertainty about rates and the economy doesn’t last forever.
DEMAND DESTRUCTION
I know the word destruction sounds intense, but we’ve very quickly lost buyer demand in the local market due to rates shooting up, so this is a solid descriptive word to use right now. The number of new pending contracts was down 12.3% in September 2026 compared to one year ago, and overall, I think we’ve conservatively lost about 15% of the buyer pool in recent months (15-20% as a range).
HOW MUCH HAVE SELLERS REDUCED THE PRICE?
It depends on the county. Here’s a look at twelve local counties to see how many active listings have had a price drop as well as how much they’ve reduced the price. Keep in mind, many listings simply started out too high, so it’s not correct to say value has dropped by 5% or 7%.
NOT EVERYTHING NEEDS A PRICE REDUCTION
There is so much conversation about the housing market online without actual stats. When looking at pendings in October so far in the Sacramento region, about 40% needed a price reduction before getting into contract. This tells us about 60% of the market was priced at a level that worked for buyers to make an offer. Keep in mind, buyers could still get into contract below the original price. The key is being able to generate a pending status though rather than being an active that goes nowhere.
SOME HOMES ARE STILL GOING QUICKLY
On average, homes took about 47 days to get into contract so far in October, but about a third of pendings were on the market for two weeks or less. So, some homes linger, but other stuff is moving quickly. My sense is buyers are pulling the trigger fast when a home is priced well and checks all the boxes of what they are looking for. Otherwise, buyers are patient, and they’re going to avoid homes that are overpriced and crusty.
WHEN A REDUCTION HAPPENED, IT WAS 6.7% ON AVERAGE
About 40% of pendings needed a reduction this month, and when the price was lowered, the average was 6.7%. I think this is a good stat to keep in mind for sellers. Sometimes sellers or agents play MLS games by lowering the price by $1 to get a new price status in the system. I get that, and sometimes it works, but I’m a bigger fan of just lowering the price to a more reasonable level.
DEMAND ISN’T AT ZERO
The housing narrative online is often polarizing, and you’d think literally no buyers are buying. Look, there is no sugarcoating the housing market has taken a big hit to buyer demand over the past month, but there have also been over one thousand pending contracts in the region since rates went above 7%.
IT’S NOT ALL CASH
We hear things like, “It’s only cash buyers purchasing right now.” In October so far, 18.6% of sales have been cash in the Sacramento region. This is a pretty normal level overall, and it’s a good reminder that about 80% of the market is financed locally. However, I have noticed slightly more cash sales over the past two months. But it’s not that more cash buyers have stepped up to the plate. It’s more about not as many financed buyers being present, so that boosts the overall percentage of cash sales on paper.
BRAND NEW VISUAL ALERT
This is a brand new visual. Let me know if you dig it. Here’s a look at the year-to-date breakdown of financing in the region. You may notice we’re still ahead of last year through September, but volume should be weaker in coming months, so we should flatten out and be on par with last year (maybe lower, but only time will tell).
FRESH OCTOBER STATS FOR CLOSED SALES
And some fresh stats for October so far. I thought this might be helpful. Remember, these are for closed sales only, so these stats really tell us more about the market in August and September when these homes got into contract. There is a whole different set of data for active listings.
A FEW OTHER VISUALS I’M EXPERIMENTING WITH
Let me know if anything here is helpful.
Thanks for being here. I appreciate it.
Question: What are you noticing in the market since rates hit 7%? And what is your ideal vacation? Mountains, beach, urban, staying home?
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