US contracts to buy previously owned homes fell to a record low in September, while single-family housing starts and building permits also declined. Rising mortgage rates are depressing demand across the housing market.
Contracts to purchase previously owned US homes plunged to a record low in September as rising mortgage rates depressed demand. The pending home sales index tumbled 7.3% to 66.0, the lowest level since the series started in 2001, the National Association of Realtors said on Tuesday.
Contracts fall against a forecast slip
Economists polled by Reuters had forecast a 0.5% slip in contracts, which become sales after a month or two. Instead, contracts fell in all four regions, and pending home sales dropped 11.3% year-on-year.
According to NAR chief economist Lawrence Yun: "Market conditions weakened in September due to fast-rising mortgage rates," he said.
Mortgage rates track Treasury yields
Mortgage rates have accelerated in recent weeks. The 30-year fixed rate averaged 7.40% last week, the highest level in nearly three years, according to Freddie Mac data. Those borrowing costs are tracking Treasury yields as the US-Israeli war with Iran fans inflation.
Homebuilding weakens too
Builders are pulling back as well. Single-family housing starts dropped 4.6% to a seasonally adjusted annual rate of 859,000 units in September, the lowest level since September 2025, the Commerce Department's Census Bureau said.
Single-family building permits decreased 4.0% to a rate of 845,000 units, the lowest level since March 2023. Overall housing starts decreased 5.2% to a pace of 1.221 million units, while economists polled by Reuters had forecast 1.305 million.
Carl Weinberg, chief economist at High Frequency Economics, said his best assessment is that starts will falter in the months ahead until the energy shock is better understood.
Sources: Investing.com (Reuters), pending home sales, Investing.com (Reuters), housing starts
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