Contracts to buy existing homes fell 7.3% in September from August and 11.3% from a year earlier, the National Association of Realtors reported on Oct. 20, 2026, with signings down in every region of the country. The drop left NAR’s Pending Home Sales Index at 66.0, the lowest level since the series began in 2001, Reuters reported, citing NAR. Economists surveyed by Reuters had expected a decline of only 0.5%.
Because a pending sale is a signed contract that usually closes within one or two months, the index is the housing market’s nearest-term leading indicator. NAR says in its methodology note that contract activity has been shown to parallel closed existing-home sales over the following two months, which puts October and November closings under pressure.
A rate shock, in NAR’s telling
NAR attributed the slump to borrowing costs. “Market conditions weakened in September due to fast-rising mortgage rates,” NAR Chief Economist Lawrence Yun said in the release. “Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates.”
The rate move has been steep. The 30-year fixed-rate mortgage averaged 7.40% in the week ended Oct. 15, unchanged from the prior week, according to Freddie Mac’s Primary Mortgage Market Survey. A year earlier the same survey put the average at 6.27%. The current level is well above the 6.71% that RealtyWire reported when the 30-year average first reached a 13-month high.
Yun offered a cautious read on where rates go next. “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.”
He also argued that prices are holding up even as volume collapses. “Despite the difficulty of obtaining a mortgage, the limited number of distressed properties is ensuring steady home prices,” Yun said. “Buyers and sellers may simply be holding back until mortgage rates move favorably.”
The West fell hardest
Every region posted declines on both a monthly and an annual basis, according to NAR:
- West: down 9.2% from August and 15.0% from September 2025
- South: down 8.2% month over month and 12.0% year over year
- Midwest: down 6.5% month over month and 8.7% year over year
- Northeast: down 4.2% month over month and 9.4% year over year
No large market escaped. Among the 50 biggest metro areas, pending sales fell from a year earlier even in the ten best performers, according to Realtor.com Economics data published with NAR’s release. The smallest annual declines were in Nashville, Tenn. (-2.0%), Hartford, Conn. (-2.1%), San Francisco (-3.5%), San Jose, Calif. (-4.6%) and Buffalo, N.Y. (-5.6%), followed by Richmond, Va., Austin, Texas, Pittsburgh, Memphis, Tenn., and San Antonio, which ranged from -5.8% to -7.1%.
The national figure is steeper than the private read that came out earlier this month. Redfin’s September report, published Oct. 12, showed pending sales down 4% month over month and falling year over year in all 50 of the largest metros, with 14.5% of contracts cancelled. NAR’s index uses a different sample, covering roughly 40% of multiple listing service data each month, and is benchmarked so that 100 equals the average contract activity of 2001. A reading of 66.0 means signings are running about a third below that baseline.
Builders pull back too
The weak demand signal landed the same morning as a soft supply report. Privately owned housing starts ran at a seasonally adjusted annual rate of 1,221,000 in September, 5.2% below the revised August estimate of 1,288,000 and 7.4% below September 2025, the Census Bureau and HUD reported on Oct. 20. The agencies note that the monthly change is within the survey’s margin of error of plus or minus 11.8%.
Single-family starts fell 4.6% to an 859,000 annual rate. Single-family permits, a guide to future construction, dropped 4.0% to 845,000, while total permits slipped 0.2% to 1,400,000. Completions rose 2.2% from August to 1,192,000 but were 14.0% below a year earlier.
The construction numbers follow a gloomy builder survey. On Oct. 19, the National Association of Home Builders reported that builder confidence fell to 29, its lowest since 2012, with 43% of builders cutting prices in October, the highest share NAHB has recorded during the 2020-2026 period.
What the two reports say together
On our reading, the pair of releases points the same direction: buyers stepped back from contracts in September and builders began fewer single-family homes, both in a month when the 30-year mortgage rate sat above 7%. NAR’s own framing is that the pause is rate-driven rather than a sign of distress, and Yun pointed to the low number of distressed sales as support for prices. Whether that holds depends on the path of rates, which Yun himself called uncertain given energy-driven inflation.
The next test arrives quickly. NAR’s statistics page lists its next pending home sales report for Nov. 18, 2026, the same day the Census Bureau has scheduled its October construction report. NAR’s October existing-home sales will show how many of September’s thin contract count actually closed. More coverage of the residential market is on RealtyWire’s housing market page.
