September contract signings plunged to their lowest since 2001, as surging rates erode buyer purchasing power across all four regions
Pending home sales fell to their lowest level in more than two decades in September, with contract signings dropping 7.3% from August and 11.3% from the prior year.
The National Association of Realtors (NAR) reported Tuesday that its Pending Home Sales Index declined to 66.0, its weakest reading since the series launched in 2001, a number that foreshadows further softening in closed sales before year-end.
Mortgage rates drive buyers to the sidelines
The 30-year fixed mortgage rate averaged 7.40% last week, its highest level in nearly three years, according to Freddie Mac’s Primary Mortgage Market Survey.
The September data marks a sharp reversal from the momentum seen earlier this year, when pending home sales climbed to a six-month high in May before rates resumed their climb.
“Market conditions weakened in September due to fast-rising mortgage rates,” said Dr. Lawrence Yun, chief economist at the National Association of Realtors in Washington.
“Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates.”
Yun acknowledged that rates could be nearing a ceiling, but warned the outlook remains uncertain.
“Given that mortgage rates have already risen much more than the Federal Reserve’s short-term interest rate hikes, mortgage rates could be topping out,” he said.
“However, increasing energy prices and the resulting inflationary pressure are highly uncertain.”
Sam Williamson of First American says September's 3.7% inflation reading has increased the likelihood of a Federal Reserve rate hike this month, adding pressure to mortgage affordability and rates. https://t.co/hXzUWxW960
— Mortgage Professional America Magazine (@MPAMagazineUS) October 14, 2026
The impact on broker pipelines is tangible. Kevin Oto, broker owner at Green Haven Capital, detailed the challenge of buyer hesitation in Mortgage Professional America this week, noting that fully qualified buyers are increasingly stalling at the finish line.
“Buyers who surmount every financial hurdle present some of my hardest conversations, these days,” Oto said.
“They have the income, the assets, the credit and a home payment they can afford, and they still hesitate.”
All four regions decline as West leads retreat
Contract signings fell in every major US region in September. The West recorded the steepest monthly drop at 9.2%, followed by the South at 8.2%, the Midwest at 6.5%, and the Northeast at 4.2%.
Year-over-year declines were similarly broad: the West fell 15.0%, the South 12.0%, the Northeast 9.4%, and the Midwest 8.7%.
The September data extended a slump that began with the steepest monthly decline of 2026 in June.
For brokers advising hesitant clients, Samantha Shelton, mortgage broker and president at Align Lending, has previously told MPA that waiting on rates carries its own risks.
“One thing I always stress: if rates drop significantly, prices will jump fast,” she said.
“This is a historical pattern. When affordability improves, competition increases. That’s why I often tell clients it’s better to be early and refinance later than wait and enter the market with the Black Friday crowd. A buyer who purchases before the rush may get a better price and still benefit when refinance opportunities open.”
Yun added that a limited supply of distressed properties has so far cushioned home prices against a sharper decline.
“Despite the difficulty of obtaining a mortgage, the limited number of distressed properties is ensuring steady home prices,” he said.
“Buyers and sellers may simply be holding back until mortgage rates move favorably.”
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