US Pending Home Sales Sank 7.3% to an All-Time Low as Mortgage Rates Bite Contracts to buy previously owned US homes collapsed in September to the weakest level on record, a sharp warning for the fall housing market. The National Association of Realtors said on October 20 that its Pending Home Sales Index tumbled 7.3% month over month to 66.0, the lowest reading since the gauge began in 2001, and down 11.3% from a year earlier. The drop blew past forecasts: economists polled by Reuters had expected a 0.5% dip, while a Wall Street Journal survey pointed to a 0.4% decline.
The index tracks signed contracts for existing single-family homes, condominiums and co-ops, deals that typically close within a month or two, making it a leading indicator of existing-home sales. September's plunge reversed a modest 0.3% gain in August, according to HousingWire. Year over year, the gauge was down 11.3%. All four US regions weakened on both a monthly and annual basis.
"Market conditions weakened in September due to fast-rising mortgage rates," NAR chief economist Lawrence Yun said, as quoted by Reuters. "Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates." Quoted by Realtor.com, Yun added a silver lining: "Despite the difficulty of obtaining a mortgage, the limited number of distressed properties is ensuring steady home prices. Buyers and sellers may simply be holding back until mortgage rates move favorably."
NAR's regional breakdown showed the WestСамый steepest declines: down 9.2% month over month and 15.0% from a year earlier. The South fell 8.2% on the month and 12.0% on the year; the Midwest dropped 6.5% and 8.7%; the Northeast declined 4.2% and 9.4%. City-level data from Realtor.com showed even buyer-friendly markets retreating: pending sales fell 2.0% in Nashville and 5.9% in Austin, while San Francisco was down 3.5% and San Jose down 4.6%.
Borrowing costs are the direct cause. Freddie Mac's weekly survey showed the 30-year fixed rate averaged 7.40% in the week to October 15, unchanged from the prior week, the highest since November 2023, versus 6.27% a year earlier. Rates have climbed 1.42 percentage points since briefly dipping to 5.98% in late February. A separate Redfin report, cited by the World Property Journal, found its own pending-sales measure down 4% in September, the steepest monthly drop in more than three years, with pending sales falling year over year in all 50 of the largest metros for the first time since September 2023, the last time rates stayed above 7%.
Because signed contracts usually become completed sales after a month or two, September's record low points to soft existing-home sales prints in October and November. Fall, normally the friendlier season for buyers, with asking prices falling for an 11th straight month and inventory climbing, is not converting into deals while rates sit near 7.4%. Freddie Mac releases its next weekly rate survey on Thursday and NAR follows with October existing-home sales on November 12. Until rates move favorably, as Yun put it, both sides look content to wait, and the index has little visible path up from 66.0.