In September, the housing market faced a severe downturn as pending home sales fell 7.3% from August and 11.3% year-over-year, according to the National Association of Realtors. This decline coincided with a sharp increase in the average rate for a 30-year fixed mortgage, which rose from approximately 6.8% to 7.6% during the month.
Lawrence Yun, NAR's chief economist, noted that while job growth and income can support home purchases, affordability is heavily influenced by mortgage rate changes. Regionally, the South and West saw the largest month-to-month sales drops at 8.2% and 9.2%, respectively.
Additionally, home construction suffered, with single-family housing starts decreasing by 4.56% to an annualized rate of 859,000, marking the lowest level since September 2025. Building permits also fell by 4%, indicating a slowdown in future construction.
Ben Ayers, a senior economist at Nationwide Financial, projected that home construction activity may remain weak into 2027, as builders struggle with current projects and profit margins are squeezed by price cuts and incentives. Furthermore, an October survey revealed that homebuilder sentiment is at its lowest in 14 years, with declines in current sales, future expectations, and buyer traffic.
Robert Dietz, chief economist at the National Association of Home Builders, highlighted ongoing supply constraints and affordability challenges as key factors keeping buyers from entering the market