Weather forecasters are predicting an El Nino winter, with conditions expected to be warmer and drier than normal in much of the U.S.

But the outlook is less sunny for the housing industry, according to Zillow, which is predicting an early winter. The home listings company’s data shows newly pending sales — which it describes as a leading indicator of future closings — fell by 8.5% year over year in September. Closed sales of existing homes also fell 2.5% over the past year.

Zillow attributes the declines to “sky-high mortgage rates and the usual fall slowdown.” It says elevated rates have pushed typical mortgage payments to 6.7% higher than a year ago, assuming a 20% downpayment and excluding taxes and insurance.

The retreat from home sales might be part of what is driving the rising costs in the rental market, Zillow believes, pointing to a 2.7% year-over-year increase in September, the biggest annual gain since April 2025.

“The for-sale market’s slowdown was predictable given where mortgage rates currently stand, but the continued strength in the rental market is more surprising,” said Mischa Fisher, chief economist at Zillow. “Buyers on the margins are finding the monthly savings for renting too good to pass up, even if their long-run goal is still to purchase a home.”

Fisher said sales are expected to remain lower than last year through the fourth quarter.

“However, it’s not out of the question that rates will decline as rapidly as they rose, which would bring both buyers and sellers back to the market,” he added. “At this point in the calendar, the question is whether they would sit out until next spring.”