September data shows housing market in a deep freeze

Key Points:

• Pending home sales in September fell 7.3% from August and 11.3% year-over-year, impacted by mortgage rates rising from 6.8% to 7.6% during the month, according to the National Association of Realtors.
• The largest monthly declines in home sales occurred in the South (-8.2%) and West (-9.2%), regions noted for high activity and high prices respectively.
• Home construction also declined sharply, with single-family housing starts down 4.56% to the lowest level since September 2025, and building permits falling 4%, signaling reduced future construction.
• Experts predict continued weakness in homebuilding through 2027 due to builders offloading projects with price cuts, squeezed profit margins, and adjustment to higher mortgage rates, which will modestly drag on economic growth.
• Homebuilder sentiment hit a 14-year low in October, reflecting challenges from supply constraints, affordability issues, elevated construction costs, and weaker consumer confidence, keeping many buyers hesitant.