Pending home sales fell 7.3% in September from August and dropped 11.3% year-over-year, according to data released today by the National Association of Realtors. The decline came as the average rate on a 30-year fixed mortgage rose sharply through the month, starting around 6.8% and climbing to 7.6% by month-end, Mortgage News Daily reported.
Lawrence Yun, NAR's chief economist, said that while job growth and income gains can support purchases, "housing affordability is more affected by changes in mortgage rates." Regional declines were steepest in the West (down 9.2%) and South (down 8.2%), the latter typically the nation's most active market.
Housing construction also contracted sharply in September. Single-family housing starts fell 4.56% to 859,000 annualized, the lowest level since September 2025, according to the U.S. Census Bureau. Building permits, which signal future construction activity, declined 4% for the month. Both declines exceeded analyst expectations.
Ben Ayers, senior economist at Nationwide Financial, told investors that "home construction activity to remain moribund into 2027," with many builders cutting prices and offering incentives to clear inventory. He predicted housing starts for single-family homes would remain low through much of next year, creating modest downward pressure on economic growth from reduced residential construction.
Homebuilder sentiment hit its lowest level in 14 years in October, the National Association of Home Builders reported Tuesday. Measures of current sales, future sales expectations and buyer traffic all fell, with buyer traffic recording the weakest reading.
Robert Dietz, NAHB's chief economist, attributed the weakness to a combination of factors. "Housing remains squeezed by supply-side constraints and significant affordability challenges," he said. "Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines."