Pending home sales in the US fell 7.3% in September to 66.0, the lowest reading since the index began in 2001, the National Association of Realtors said Tuesday.
Contracts were down 11.3% from a year earlier, with declines in all four regions. Economists polled by Reuters had expected a drop of just 0.5%.
The culprit is borrowing costs. The 30-year fixed mortgage rate averaged 7.40% last week, the highest in nearly three years, per Freddie Mac.
The West took the hardest hit, down 9.2% month-over-month and 15.0% year-over-year. The Northeast held up best at a 4.2% monthly decline.
US Pending Home Sales by Region, September 2026
| Region | Month-over-month change (%) | Year-over-year change (%) |
|---|---|---|
| Northeast | -4.2% | -9.4% |
| Midwest | -6.5% | -8.7% |
| South | -8.2% | -12.0% |
| West | -9.2% | -15.0% |
| US total | -7.3% | -11.3% |
Among the 50 largest metros, even the strongest markets shrank. Nashville posted the smallest annual decline at 2.0%, followed by Hartford at 2.1% and San Francisco at 3.5%.
Buyers had reasons to shop. Asking prices fell for an 11th straight month in September, price reductions ticked up, and inventory climbed. Rates outweighed all of it.
Builders are cutting prices and still losing traffic
Builder confidence in newly built single-family homes dropped three points to 29 in October, the lowest since June 2012, on the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading under 50 means more builders see conditions as poor than good.
The prospective buyer traffic component fell five points to 18.
"Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines."
Robert Dietz, National Association of Home Builders
Discounting is now standard. Builders cutting prices reached 43% in October, the highest share in the 2020-2026 period, and 65% used sales incentives.
New construction is feeling the squeeze too. Mortgage applications for new single-family homes fell 8.3% from September 2025, and estimated sales are running at a seasonally adjusted 584K units, the lowest in more than six years.
The rate path decides what happens next
Yun argued that mortgage rates have already risen far more than the Federal Reserve's short-term hikes, suggesting they could be topping out.
Realtor.com senior economist Hannah Jones sees it differently, expecting elevated rates to persist after hot inflation data, with markets pricing in the possibility of another Fed hike before year-end.
The read-through lands on homebuilders. PulteGroup ($PHM) is a pure-play builder, D.R. Horton pairs volume construction with in-house financing that reacts fast to rate moves, and Lennar draws most of its roughly $31.9B revenue from homebuilding.
Pending contracts typically close within one or two months, so September's reading points to weak closed sales heading into winter.
