Pending sales hit 25-year low

Pending home sales, which measure signed contracts on existing homes, fell 7.3 percent in September from August and dropped 11.3 percent year-over-year.

Lowest reading since 2001

The September pending home sales report marked the lowest nationwide reading for this series since it launched in two thousand one, according to Mortgage Professional America.

Mortgage rates surge sharply

The average thirty-year fixed-rate mortgage surged from about six point nine percent to as high as seven point six percent in September, according to Mortgage News Daily.

Rates rising since late February

Since late February, the average thirty-year fixed-rate mortgage has been rising, with particularly sharp increases occurring in September as buyers face higher borrowing costs.

South and West hit hardest

Declines were steeper in the West and South, while even the strongest markets like Nashville and San Francisco saw declines in signed contract activity.

Affordability squeezed by rates

Lawrence Yun, chief economist of the National Association of Realtors, said housing affordability is more affected by changes in mortgage rates than job growth or income gains.

“Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates.”

Rates may be topping out

There may be reason to be optimistic that mortgage rates could be topping out because they have already risen more than the Federal Reserve's short-term interest rate hikes.

Energy prices add uncertainty

Home buyers could be grappling with other concerns beyond mortgage rates. Increasing energy prices and the resulting inflationary pressure are highly uncertain, according to Yun.

“Increasing energy prices and the resulting inflationary pressure are highly uncertain.”

Slowdown could extend beyond 2026

The surprisingly steep decline in September homebuying activity suggests the housing slowdown could stretch well beyond twenty twenty-six, signalling prolonged weakness ahead.