Pending Home Sales Hit a Record Low in September as Mortgage Rates Hold Near 7.4%

Contract signings fell 7.3% in a single month, and the mortgage data behind it points to a housing market that is still freezing up, not thawing.

Pending home sales hit a record low in September, falling 7.3% from August, far worse than the 3.9% drop economists expected. That number comes from the National Association of Realtors, and it is the clearest sign yet that the housing market did not find its footing this fall. The culprit is mortgage rates. The 30 year fixed rate was 7.40% for the week of October 11, flat from the week before but up 113 basis points from a year ago, according to Freddie Mac. When rates sit that high, fewer buyers sign contracts, and pending sales are a leading indicator, since homes usually go under contract a month or two before the sale closes. That means the closings reported in October and November are likely to look just as weak.

Why Rates Above 7% Are Freezing Contracts, Not Just Slowing Them

This is not a gradual cooling. Mortgage applications were down 37% year over year, refinancing applications were down 56%, and purchase applications were down 16% year over year, all similar to the week before. Purchase applications also fell 4% from the prior week even though they sit 5% above the February 2025 trough. Adjustable rate mortgages made up 11% of volume, up from 9% a year ago, which tells you buyers are reaching for anything that lowers a monthly payment. NAR chief economist Lawrence Yun said market conditions weakened in September due to fast rising mortgage rates, and that affordability right now is driven more by rate moves than by job growth or income gains. He also said buyers and sellers may simply be holding back until rates move in their favor. Goldman Sachs economists put it more bluntly: they expect near term housing activity to stay under pressure given the rate and broader macro backdrop.

What a Frozen Housing Market Does to Jobs and Income

Every home sale that does not happen is a chain of income that does not happen either. Real estate agents do not get paid. Title companies, movers, home inspectors and appraisers do not get hired for that transaction. Lenders process fewer loans, which is part of why mortgage applications are down 37% year over year, a drop that hits loan officers and processors directly. HousingWire reported new pending single family sales for the week of October 16 were down 13.1% year over year, at 51,947 sales, so this is not a one month blip, it is a trend running into October. If you work in any job tied to a closing, your income is tied to a market that NAR just measured at a record low.

The Regional Split: the West and South Are Falling Fastest

The pain is not even across the country. Contract signings fell hardest in the West, down 9.2% from August and 15% from a year ago. The South was close behind, down 8.2% month over month and 12% year over year. The Midwest fell 6.5% monthly and 8.7% annually. The Northeast held up best but still fell 4.2% from August and 9.4% from a year earlier, and it is dealing with the opposite problem: tight inventory that pushed the median existing home price there up 5% to $523,600, the largest annual price increase in the country. So in parts of the country homes are not selling because buyers cannot afford the rate, and in the Northeast homes are not selling because there are not enough of them.

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What This Means If You Run a Business Tied to Housing

I see this from two sides. My marketing company works with home service contractors, roofers, pressure washers, lawn care crews, and a lot of their business comes from new homeowners who just moved in and need work done. When pending sales hit a record low, that pipeline of new-mover work dries up months later, so contractors should expect more of their business to come from existing customers and referrals, not turnover. On the insurance side, my agency writes homeowners policies, and every sale that does not close is a new policy that does not get written. Fewer closings also means fewer people shopping their coverage for the first time, which keeps more business sitting in renewals. If you are a contractor or an agent reading this, the next few months are a retention game, not a new-mover game.

What to Watch Before You Buy, Sell or Hire

If you are buying, do not assume rates are about to drop just because Yun called the recent run up possibly close to topping out. He also flagged rising energy prices as an inflation risk that could keep rates elevated, so treat that as a maybe, not a plan. If you are selling, price with the reality that your region's numbers show, the West and South are seeing the steepest drops in signed contracts, so homes may sit longer there. If you run a business that depends on home sales, mortgage activity or new movers, build your forecast off this data rather than hoping for a bounce, and watch the next pending sales report before you commit to hiring or inventory decisions tied to a housing recovery that has not shown up yet.