US pending home sales hit a record low, pressuring housing-linked businesses

US pending home sales—signed contracts to buy previously owned homes that have not yet closed—fell to a record low in September. Contracts dropped 7.3% from August and 11.3% from a year earlier, with reporting attributing weaker demand to rising mortgage rates.^[1][2]

The measure tracks the pipeline of future completed transactions, not sales already finalized. Housing starts also fell 4.56% that month to an annualized 859,000 homes, meaning the number that would be started over a year at that pace, rather than the actual monthly total.^[2]

Higher mortgage rates raise the monthly payment on the same loan, forcing some buyers to reduce their budgets or postpone purchases. If the sharp decline in contracts carries through to completed sales, brokers would earn fewer commissions, lenders would make fewer home-purchase loans, and furniture and appliance retailers could lose moving-related orders.^[1][2]

Financing conditions have not clearly eased. The 10-year Treasury yield, a reference point for long-term borrowing costs, stood at 5.12% on October 20, only 0.03 percentage points below the prior session's 5.15%; it is not the same as a mortgage rate. Housing weakness also does not establish that Fed rate cuts are coming: related coverage says the central bank is still considering further increases.^[3]

Impact

What to watch next

• October 21: The Mortgage Bankers Association's 30-year mortgage-rate release, previously 7.5%, will show whether financing pressure on buyers is intensifying or easing.
• October 27: September new-home sales will test whether weakness in existing-home contracts extends to demand for builders' homes.