What did pending home sales look like in September?

Pending home sales dropped 7.3% month-over-month and 11.3% year-over-year in September, reaching the lowest level in the data’s history, as mortgage rates climbed past 7% for the first time since January 2025. Elevated rates have deteriorated housing market conditions, and this month’s deep freeze in buyer activity could persist until affordability improves. Rates are now in the mid-7% range, further eroding buyer purchasing power. The fall season typically favors buyers, and this year was no exception, with home asking prices falling for an 11th straight month in September, price reductions ticking higher, and inventory climbing. The market conditions buyers have been waiting for have arrived in much of the country, but with rates reaching their highest level in nearly 3 years, many households are finding they can’t capitalize, leaving them stuck on the sidelines just as the market tilts in their favor.

What does this mean for buyers, sellers, and the housing market?

Mortgage rates are expected to stay elevated after the latest CPI data showed both headline and core inflation picking up. As a result, markets are pricing in the possibility of another Fed rate hike before the end of the year. Against that backdrop, buyers will likely keep facing tough affordability conditions through year-end, especially as wage growth runs below inflation and further erodes real buying power.

The regional picture was consistent with the national, with declines both month-over-month and year-over-year in all four regions. The West saw the largest monthly decline with a 9.2% drop, followed by the South (-8.2%), Midwest (-6.5%) and the Northeast (-4.2%). On an annual basis, the West led with a 15.0% decrease, followed by the South (-12.0%), the Northeast (-9.4%) and the Midwest (-8.7%). Metro-level data from Realtor.com showed decreases in all major markets, with the smallest drops in Nashville (-2.0% YY), Hartford (-2.1%) and San Francisco (-3.5%). The local data confirms that higher rates are impacting buyers throughout the country, even in markets that have shown consistent strength.

Pending home sales, or contract signings between buyers and sellers, mark the first formal step in the homebuying process and typically lead closings by one to two months, making them a useful gauge of near-term activity. The August pickup in contract signings carried through the pipeline, with existing-home sales rising month over month in September but remaining softer year over year. Months’ supply held near a 10-year high, as ample inventory in well-supplied markets met tepid buyer demand.

Even as rates strain budgets, the market is becoming more hospitable for those who can afford to participate. The latest Realtor.com® Market Clock® puts the U.S. market at 4 o’clock, a late balanced market leaning toward buyers. Lower prices, a slower pace, and more price reductions may help offset some of the impact of higher rates.