Pending home sales dropped sharply in September as mortgage rates spiked in response to a run-up in U.S. Treasury yields, according to newly published industry data.

The National Association of Realtors (NAR) said Tuesday that buyers and sellers went under contract last month at a pace more than 7% slower than August and more than 11% slower than a year ago.

Monthly and annual declines were observed across all four U.S. regions. The West posted the sharpest slowdown in both instances.

Advertisement

“Market conditions weakened in September due to fast-rising mortgage rates,” said NAR Chief Economist Lawrence Yun in a press release announcing the monthly figures.

A sale is listed as pending when the contract has been signed but the transaction has not closed. The sale is usually finalized within the next month or two, but can take longer or ultimately never close.

Closed sales remained below 4 million units on a seasonally adjusted annual basis in September, reflecting a slight increase from August but lower year over year for the second consecutive month.

High home prices, weak consumer confidence and mortgage rates that have steadily risen since the Iran war began in late February have put a damper on home sales and overall housing activity throughout 2026.

That has kept transaction volumes around 30-year lows for the fourth straight year as mortgage lenders and housing stakeholders look to 2027 with trepidation. Most housing forecasts project mortgage rates remaining at current levels and prolonging a yearslong sales drought.

Average mortgage rates for typical 30-year home leans rose from 6.8% to nearly 7.5% over the course of September, according to Mortgage Bankers Association data. The sharp increase sidelined prospective buyers, with mortgage demand falling accordingly.

Hedging and market intelligence firm Optimal Blue said last week that it expects mortgage rates to only keep climbing — hitting 7.8% over the next three months and 7.85% over the next year.

Yun injected some optimism into Tuesday’s pending home sales report, though, suggesting borrowing costs may be topping out, given that “mortgage rates have already risen much more than the Federal Reserve’s short-term interest rate hikes.”

“Buyers and sellers may simply be holding back until mortgage rates move favorably,” said Yun.