US Pending Home Sales Hit Historic Low as Mortgage Rates and High Prices Freeze Demand

The US housing market deteriorated sharply in September, with pending home sales falling 7.3% to a record index reading of 66.0, the lowest level in at least 25 years according to CNBC, dropping below troughs seen during the 2008 financial crisis and the COVID-19 pandemic. The National Association of Realtors reported that existing home sales ran at an annual pace of just 3.99 million in September, making August and September the two slowest months of the year.

Mortgage rates reaching 7.61% in early October have been a central driver of the freeze, pushing housing affordability to near its lowest point in 40 years. Inventory has climbed to its highest level in seven years, with more than 1.6 million homes sitting without buyers, and sellers outnumbering buyers by 63%, the widest gap in over a decade. Homes are now sitting on the market a median of 33 days before selling.

Despite the demand collapse, prices have not fallen. The median home sold for $417,500 in September, up 1.3% from a year ago and the 39th consecutive month of annual price gains. M/I Homes CEO flagged an "increasingly difficult" housing market, while Western US housing starts fell 23.2%, adding pressure on homebuilder stocks. A Desjardins report offered a modest counterpoint, projecting Ontario's housing market could see a modest rebound in 2027, though conditions remain constrained near term.