Why sellers won't cut price: the $627 gap between their note and today's rate

Houston's August numbers look contradictory until you do the mortgage math.

Closings: 7,100, down 11.5% year over year.

Active listings: 38,947, up only 0.5%.

Months of inventory: 5.3, unchanged.

Days on market: 54, up from 52.

Median price: $330,000, down 1.5%.

Inventory is not surging. Sales are falling. The same pile of houses is sitting longer.

Here is why the sellers are not capitulating.

Freddie Mac had the 30-year at 6.71% on September 3. Per the FHFA National Mortgage Database, 78.8% of outstanding US mortgages carry a rate below 6%, 68.6% are below 5%, and 51.5% are below 4%.

Run that on Houston's median house. An owner who financed $240,000 in 2021 at 3.5% pays about $1,078 a month in principal and interest. Sell, and buy the same $330,000 house again with 20% down at 6.71%, and the note is about $1,705.

$627 more every month. A 58% increase. Same house.

Then the condition problem. A house untouched since 2005 does not sell in 54 days against 39,000 listings without work or a price cut. On 2026 cost-versus-value figures a roof runs about $30,800 and returns roughly 65%, HVAC about $18,500 at 65%, a minor bathroom about $24,600 at 70%. All three: about $74,000 spent, about $49,000 recovered.

So the trade for a median seller is $330,000 gross, minus about $74,000 of work, minus roughly $24,750 in commission and closing, and a payment that goes up $627 a month on the other side.

That is not a stubborn seller. That is a rational one.

The practical takeaway for anyone buying: days on market is not a motivation signal in this market. A listing sitting 120 days is often an owner who has run these same numbers and concluded that waiting is cheaper than moving. His floor is built out of his own mortgage, and time does not move it.

The discounts are where nobody is protecting a payment. Estates and probate. Out-of-state owners. Tired rentals. Bank-owned inventory. And the 21.2% of mortgages already above 6%, a share that just passed the number of sub-3% loans for the first time.

That last group grows every month, and it is the part of the lock-in story that gets ignored.

Curious whether others are seeing the same split in their markets: flat listing counts but falling volume, rather than a real inventory build.