US Housing Market Freezes as Pending Sales Hit Record Low Amid Rate Spike

Key points

• Pending home sales dropped 7.3% from August and 11.3% year-over-year, reaching their lowest levels since at least 2001.
• The 30-year fixed mortgage rate rose sharply in September, starting around 6.8% and reaching 7.6% by month's end.
• Housing starts fell 4.56% to an annualized 859,000, the lowest level since September 2025.
• Homebuilder sentiment hit a 14-year low, with current sales, future expectations, and buyer traffic all declining.
• Regional declines were widespread, with the South and West experiencing the largest month-to-month drops.

Background

This sharp decline follows a series of recent housing market slowdowns. In August, existing home sales hit a 10-month low despite record inventory, and in September, existing home sales fell to a 12-year low as mortgage rates rose above 7%. The current data reflects a continued trend of affordability challenges driven by rising borrowing costs.

How outlets are covering it

Reuters and CNBC both report the same core data: pending home sales fell 7.3% month-over-month and 11.3% year-over-year in September. However, CNBC provides additional context on the broader housing market, including the decline in housing starts and the 14-year low in homebuilder sentiment. Reuters focuses primarily on the pending sales data and the impact of rising mortgage rates, while CNBC emphasizes the 'deep freeze' in the housing market and the moribund state of home construction activity.

Why it matters

The record low in pending home sales signals a significant slowdown in the US housing market, which could have broader implications for the economy. Rising mortgage rates are making homes less affordable, even as job growth and income gains remain stable. This could lead to a drag on economic growth from reduced residential construction and lower consumer spending on housing-related goods and services.

What to watch

Economists expect home construction activity to remain moribund into 2027, with many builders using price cuts and incentives to unload current projects. The market is expected to adjust to a higher rate environment, which could continue to suppress housing starts and sales in the coming months.