Pending home sales sink to 25-year low as buyers flee high mortgage rates

Pending home sales—a forward-looking gauge based on signed contracts, not closed transactions—fell in September to the lowest level on record, a low not seen in roughly 25 years. The decline followed the average 30-year fixed mortgage rate crossing above 7%, a threshold that sharply raises monthly payments and sidelines rate-sensitive buyers.

The signal matters because contract signings typically lead actual closings by one to two months, so September's weakness foreshadows softer existing-home sales data ahead. It also illustrates how quickly affordability constraints can cool demand even when the underlying labor market remains firm.

What to watch: whether mortgage rates retreat meaningfully from 7%, whether sellers respond with price cuts or concessions, and whether inventory builds as homes linger on the market. For markets, housing-sensitive sectors—homebuilders, mortgage lenders, and retailers tied to home improvement—tend to react to these leading indicators before broader economic data confirm the trend.