US Home Sales Diverge as Mortgage Rates Top 7 Percent

Rising borrowing costs are reshaping the US housing market, with pending home sales falling sharply in September while completed transactions recorded a modest increase. Reports published October 12, 2026, by Yahoo Finance and Kitco, drawing on data from Redfin and the National Association of Realtors (NAR), show that mortgage rates above 7% are limiting affordability even as buyers gain more negotiating power.

According to Redfin's data published by Yahoo Finance, pending home sales dropped 4% from August on a seasonally adjusted basis, marking the largest monthly decline in more than three years. The measure tracks homes entering contracts and provides an early indication of housing market activity.

Pending sales declined year over year in all 50 of the most populous US metropolitan areas for the first time in three years. The weekly average mortgage rate reached 7.28% at the end of September, its highest level in three years, according to the report.

The steepest annual declines occurred in Western markets. Seattle recorded a 24.4% decrease, followed by Los Angeles at 16%, San Diego at 15.8%, and Anaheim, California, at 15.5%. Redfin attributed pressure in Southern California to high home prices and rising financing costs, while Seattle also faced an uneven local job market.

Completed home sales presented a different monthly picture. According to NAR data reported by Kitco, existing-home sales, including single-family houses, townhomes, condominiums, and cooperatives, increased 1.5% in September to a seasonally adjusted annual rate of 3.99 million. However, sales remained 2.2% below their year-earlier level.

NAR Chief Economist Lawrence Yun said the monthly improvement did not eliminate broader weaknesses in the market. He noted that August and September were the two slowest months for home sales this year, while higher mortgage rates continued to restrict buyer eligibility.

Yun also pointed to improving inventory and longer marketing periods as factors strengthening buyers' negotiating positions. The median existing-home price across all housing types reached $417,500, up 1.3% from a year earlier and extending the annual price-gain streak to 39 consecutive months.

Total housing inventory rose 1.9% from August to 1.60 million units, equivalent to a 4.8-month supply, according to NAR. Separately, Redfin reported that the total number of homes available for sale reached its highest level since March 2020.

Redfin's figures also showed that 14.5% of homebuying deals fell through in September, the highest share in the company's records. The growing availability of homes has given buyers more opportunities to reconsider purchases and negotiate terms.

Chen Zhao, Redfin's head of economic research, said mortgage rates above 7% were reducing the number of households able to afford a purchase. She also identified opportunities for buyers to negotiate prices, closing costs, repairs, and assistance with mortgage rates as competition eased.

Zhao advised sellers to set realistic asking prices and consider incentives that could make purchases more affordable. Despite the slowdown, she noted that some buyers still need to move and remain active in the market.

The contrasting September figures reflect different stages of the transaction process. Pending sales weakened as financing costs rose, while completed purchases included contracts negotiated in July and August, when economic uncertainty and increasing mortgage rates were already discouraging some prospective buyers.