Housing Market Freezes as Pending Home Sales Plunge to a Record Low and Builders Pull Back

WASHINGTON, Oct. 20 (TodayViralUSA) — Contracts to buy existing U.S. homes fell to the lowest level on record in September and home construction slowed sharply, as mortgage rates above 7% pushed more buyers to the sidelines, according to data released Tuesday.

The National Association of Realtors’ pending home sales index dropped 7.3% from August to 66.0, the weakest reading since the series began in 2001, Reuters reported. Economists polled by Reuters had expected a decline of just 0.5%. Signed contracts were down 11.3% from a year earlier and fell in all four regions, with the steepest monthly drops in the West, down 9.2%, and the South, down 8.2%, according to CNBC.

“Market conditions weakened in September due to fast-rising mortgage rates,” said Lawrence Yun, the NAR’s chief economist.

Rates climb with the war

The average 30-year fixed mortgage rate climbed from about 6.8% at the start of September to 7.6% by the end of the month, according to Mortgage News Daily figures cited by CNBC. Freddie Mac’s weekly survey put the rate at 7.40% last week, its highest in nearly three years. Borrowing costs have tracked Treasury yields higher as the U.S.-Israeli war with Iran fuels inflation, Reuters noted.

Construction slows

Separately, the Commerce Department and the Department of Housing and Urban Development said housing starts fell 5.2% in September to a seasonally adjusted annual rate of 1.221 million units, 7.4% below a year earlier. Single-family starts declined 4.6% to an 859,000 pace, the lowest level since September 2025, while building permits, a gauge of future construction, slipped 0.2% to 1.40 million. Single-family permits fell 4% to 845,000.

The National Association of Home Builders said multifamily starts dropped 6.7% to a 362,000 annual rate and were down nearly 25% from a year ago. The group’s October survey of builder sentiment, also released Tuesday, fell to its lowest level in 14 years, with current sales, expected sales and buyer traffic all weakening, CNBC reported.

“High land, labor and construction costs are eroding builder confidence,” said NAHB Chairman Bill Owens, a builder from Worthington, Ohio. The association said it expects further declines in single-family production in 2027 as rates stay elevated and material costs rise.

A drag on growth

Economists said the weakness is unlikely to reverse quickly. “We expect home construction activity to remain moribund into 2027,” Ben Ayers, senior economist at Nationwide Financial, wrote in a note, adding that many builders are relying on price cuts and incentives to clear current projects. He said reduced residential construction would add a modest drag to economic growth.

The next reading on housing starts is scheduled for Nov. 18.