Pending home sales sink to 25-year low as buyers flee high mortgage rates

By Aarthi Swaminathan

Pending home sales in September fell to the lowest level on record as mortgage rates surpassed 7%

Pending home sales offer an early read of how the housing market will fare in the coming months.

Contract signings to purchase homes fell in September to the lowest level on record, as buyers fled the housing market in the wake of the average 30-year mortgage rate crossing over 7%.

Pending-home sales, which refers to home transactions that are under contract but have not yet closed, fell in September to the lowest level since 2001, when the National Association of Realtors began tracking the figure.

NAR, which reported the data on Tuesday, attributed the sharp drop in home-buying demand to rising mortgage rates.

Pending home sales offer an early read of how the housing market will fare in the coming months.

The data suggests that home-buying demand has fizzled out. Pending home sales fell 7.3% in September from the previous month. They were also down 11.3% from the same month last year.

In the same month, surging oil prices and expectations of possible interest-rate hikes by the Federal Reserve pushed the 30-year mortgage beyond 7%. Higher mortgage rates carry higher borrowing costs for home buyers, so the jump pushed many out of the market.

Other parts of the housing market are grappling with weak demand. On Monday, home builders reported a gloomy outlook, as buyer traffic fell to a 14-year low.

-Aarthi Swaminathan

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10-20-26 1006ET