Indianapolis metro, Indiana

Welcome to the Indianapolis metro HousingGauge, your weekly local market report for the week of October 5, 2026.

Here is the headline. Indianapolis metro's HousingGauge score is 43 out of 100, which puts the market in the RED zone. Conditions have weakened over the past three months, and financing remains expensive.

Three developments stand out this week.

First: Indianapolis metro turned RED. The score moved from 46 to 43, crossing from YELLOW into RED.

Second: Mortgage rates up 0.85 points in three months. The 30-year fixed rate averages 7.28%, versus 6.43% three months ago.

Third: Score down 14 points over 13 weeks. The score moved from 57 to 43 over the past 13 weeks, driven mainly by Mortgage Conditions (−7.0 points).

Now, what is behind the score?

Mortgage Conditions scores 12 out of 100. The 30-year fixed rate averages 7.28%, up 0.82 percentage points over six months. Financing remains expensive, limiting affordability for leveraged buyers.

Supply & Buyer Leverage scores 47 out of 100. Inventory is 9.5% higher than a year ago (7,212 active listings), with 2.8 months of supply. Homes take a median 34 days to sell at 98.0% of list price, and 26.7% of listings have had a price cut. Negotiating leverage is fairly balanced between buyers and sellers.

Monetary Conditions scores 53 out of 100. The real policy rate is 1.24%, 0.23 points above the estimated neutral rate (r-star) of 1.01% — a near neutral stance. The fed funds rate has risen 0.24 points over six months.

Demand Trend scores 35 out of 100. Pending sales are 4.6% lower than a year ago and closed sales are 4.9% lower. Days on market are 17.2% longer than a year ago. Buyer demand has softened.

Valuation & Affordability scores 77 out of 100. The median home costs 4.1 times the median household income. Principal and interest on a typical purchase would take 26.8% of that income at current rates. Inflation-adjusted prices are 0.8% lower than a year ago. Valuations look comparatively reasonable.

Rental Economics scores 64 out of 100. A year of median rent equals 5.7% of the median price (a price-to-rent ratio of 17.5). Rents are up 3.3% year over year. Rental economics are middling.

The score is down 3 points from last week's report (46 to 43). Over 13 weeks it is down 14 points, from 57 to 43. The largest contributors were Mortgage Conditions (−7.0 points) and Demand Trend (−3.3 points).

So what would move Indianapolis metro into the yellow? It is close: any one of these would likely do it on its own: 30-year mortgage rate falls below 7.00% (now 7.28%); pending sales decline less than 0.5% year over year (now −4.6%); the Fed keeps cutting over six months (now +0.24 pts); and policy gap (real policy rate minus r-star) narrows below −0.15 pts (now +0.23 pts).

And what could make conditions worse? Watch for these together: 30-year mortgage rate rises above 7.60% (now 7.28%); pending sales fall more than 9.0% year over year (now −4.6%); the Fed raises rates more than 0.45 pts over six months (now +0.24 pts); policy gap (real policy rate minus r-star) widens above +0.55 pts (now +0.23 pts); and months of supply falls below 2.1 months (now 2.8 months).

That is the Indianapolis metro HousingGauge for this week. The HousingGauge score describes market conditions. It is not a recommendation to buy or sell, and it is not individualized financial advice. For charts, sources and the full methodology, visit housinggauge.com. Thanks for listening.