Pending Home Sales Hit Record Low as Mortgage Rates Rise

Rising borrowing costs and persistently high home prices pushed the US housing market to a historic low in September, with pending home sales falling sharply as buyers struggled to afford properties. Data released Tuesday by the National Association of Realtors (NAR) showed the Pending Home Sales Index dropping to its lowest level since tracking began in 2001.

Pending home sales declined 7.3% from August, according to NAR. Meanwhile, Mortgage News Daily reported that the average rate on a 30-year fixed mortgage reached 7.43% on Monday, up from 7.37% on Friday.

The increase in mortgage rates over the previous eight weeks, alongside a larger rise since the start of the Iran war, has made homeownership increasingly difficult for millions of prospective buyers, according to data provided to ABC News by NAR.

When mortgage rates rise from 6% to 7%, nearly 6 million fewer Americans can afford the monthly payment on a median-priced US home with a 10% down payment, NAR data showed. The median price of a single-family home stood at approximately $435,000 in September 2026.

A separate estimate from Pantheon Macroeconomics, released Wednesday, found that the monthly payment for a median-priced home would consume 40% of average after-tax income that month, up from 35% at the beginning of the year.

Samuel Tombs, Pantheon's chief US economist, said housing affordability had deteriorated despite relatively stable home prices in recent years.

"Affordability is too stretched, despite the near-stagnation in home prices for the last three years, for the rise in mortgage rates to leave no mark," said Samuel Tombs, Pantheon's chief US economist, in a research note.

Economists said many households, particularly first-time buyers, were postponing purchases because of affordability concerns. Other homeowners who secured lower mortgage rates have been reluctant to sell and move, further constraining activity in the housing market.

A poll conducted by ABC News, The Washington Post and Ipsos found that half of US adults considered their mortgage or rent unaffordable.

Regionally, the West recorded the largest decline in pending home sales, followed by the South, Midwest and Northeast. NAR Chief Economist Lawrence Yun attributed the downturn to rapidly rising mortgage rates and said higher energy prices were adding to economic uncertainty.

The slowdown also extended to residential construction. A separate report released Wednesday by the Commerce Department's Census Bureau showed housing starts falling 5.2% in September from August and 7.4% from a year earlier.

Housing starts, which measure the number of new homes on which construction begins, fell to an annualized rate of 1.221 million units, according to the Census Bureau.