US pending home sales drop to record low in September

what happened

Contracts to buy previously owned US homes fell to a record low in September as mortgage rates climbed sharply. The pending home sales index dropped 7.3% to 66.0, the lowest reading since the series began in 2001, the National Association of Realtors said, according to Reuters.

Reuters’ economists had expected only a 0.5% decline. NAR chief economist Lawrence Yun said “market conditions weakened in September due to fast-rising mortgage rates.” Contracts fell in all four regions, and the index was down 11.3% from a year earlier.

The 30-year fixed mortgage rate averaged 7.40% last week, its highest level in nearly three years, according to Freddie Mac. Borrowing costs have been tracking Treasury yields as the US-Israeli war with Iran fuels inflation, weighing on home sales.

why it matters

The data show how rising Treasury yields are feeding into mortgage costs and cutting housing demand. For markets, this points to a slowdown in the property sector and possible pressure on homebuilders and mortgage lenders, and it underlines how inflation risks are shaping expectations for interest rates.

market impact

US mortgage rates and homebuilders: higher borrowing costs are curbing housing demand

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