- Pending home sales dropped 7.3% from August and 11.3% from a year earlier as mortgage rates spiked, with the steepest monthly declines in the South and the West.
- Single-family starts slid 4.56% to 859,000 annualized, permits fell 4%, and builder confidence hit its weakest reading in 14 years as buyers stayed on the sidelines.
- Nationwide’s economist expects residential construction to stay weak into 2027, which keeps new housing supply thin and adds a modest drag on economic growth.
Mortgage rates jumped in September and pending home sales took the hit, falling 7.3% from August, CNBC reports, citing National Association of Realtors data.
Against a year ago, contracts on resale homes are off 11.3%. Mortgage News Daily has the 30-year fixed rate opening the month near 6.8% and closing it at 7.6%.
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Rates, Not Paychecks
NAR chief economist Lawrence Yun said rates, more than hiring or wage gains, drive how affordable a home feels. Good jobs data can’t offset a rate move this fast.
No region escaped. The West lost 9.2% month over month and the South 8.2%. That stings because the South normally leads in activity and the West is the costliest.
Builders Retreat
Construction numbers are just as soft. Single-family starts slid 4.56% to an annualized 859,000, the weakest since last September, per the Census Bureau. Permits, a gauge of future building, fell 4%. Analysts had expected milder declines.
Builder confidence is at a 14-year low in the National Association of Home Builders’ October reading. Showroom traffic fared worst, while current and expected sales also declined.
Zoom Out
Forecasters saw this pressure building. Fannie Mae has already lifted its mortgage rate forecast to 7.5% for 2027.
Meanwhile builders are cutting prices and offering incentives to clear unsold homes, which eats into their profit margins.
Why It Matters
Nationwide Financial senior economist Ben Ayers expects home construction to stay depressed into 2027. Single-family starts could stay low through much of 2027 while buyers adjust to pricier borrowing, he said, shaving a little off economic growth.
The bottom line: fewer new homes get built while demand sits waiting for relief on rates.
What’s Next
NAHB chief economist Robert Dietz describes a market pinched on both supply and affordability. Buyers exist, he said, but rates, building costs and shaky confidence keep them out.
The October rate path will show whether September was a one-month shock or the start of a longer freeze.
