US Housing Market Slows as Mortgage Rates Rise
Mortgage rates rose from roughly 6.8% to 7.6% in September, causing a 7.3% drop in pending home sales [1]. This shift has led to the lowest level of contract signings in at least 25 years and an increase in contract cancellations [2].
What happened
- September 2026
Average 30-year fixed mortgage rates climb from 6.8% to 7.6% [1].
- September 2026
Pending home sales fall 7.3% from August and 11.3% compared to the previous year [1].
- September 2026
Single-family housing starts drop 4.56% to the lowest level since September 2025 [1].
- October 2026
Homebuilder sentiment reaches its lowest point in 14 years [1].
What you need to know
The West and South saw the largest monthly sales declines at 9.2% and 8.2%, respectively [1].
Building permits fell 4% in September, suggesting a slowdown in future construction [1].
Builders are using incentives and price cuts to sell existing projects [1].
Housing starts and permits have fallen more than analysts expected [1].
The exact number of contract cancellations is not included in the pending sales data [2].
Background
Pending home sales track signed contracts for existing houses and serve as a primary indicator of buyer activity [1][2].
The market is currently facing a combination of high construction costs, low consumer confidence, and limited housing supply [1].
Economists suggest that reduced construction activity now could lead to fewer available homes and higher prices in a few years [2].
Questions people ask
Why are pending home sales dropping?
Higher mortgage rates have made homes less affordable, causing buyers to pull back or cancel contracts [1][2].
How is the construction industry reacting?
Housing starts and building permits have declined as builders see less demand and struggle with profit margins [1].
Where this came from
Found through Google Trends and drafted with AI from at least two cited sources. Published automatically after passing our automated checks for sources, wording and safety. It may not have been reviewed by a person yet. Report a correction.