Pending Home Sales Plunge to Record Low

And these mortgage rates too shall pass? It’s been four years of mortgage rates in a historically normal range. What’s high is inflation and home prices.
By Wolf Richter for WOLF STREET.

Pending sales of existing homes in September plunged by 7.3% from the already rock-bottom levels in August, seasonally adjusted, and by 11.3% year-over-year, and by nearly 40% from September 2019, to record low volume in the data going back to 2010, according to the National Association of Realtors today.

Compared to September 2010, during the Housing Bust, and the first September in the data, they’ve collapsed by 17%.

Compared to September 2021, pending sales have collapsed by 43%; compared to 2020 by 48%.

The NAR’s metric of pending home sales tracks contracts that were signed in September but that haven’t closed yet and could still get canceled. The rate of cancellations has been running high. Pending home sales are a preview of what is coming in terms of closed home sales.

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

And that’s of course precisely what buyers and sellers have been doing for four years, which is the problem, hence the collapse of home sales.

Mortgage rates have been back in the normal range for those four years – it’s just that there is a whole generation of buyers and sellers out there that haven’t seen normal mortgage rates and are waiting for abnormal QE-and-ZIRP-based mortgage rates to return. But the Fed’s financial repression, which started in 2008, was among the factors that triggered that worst inflation in 40 years, and that inflation now refuses to go back into the bottle.

In terms of waiting for those QE-and-ZIRP based mortgage rates to return, Beckett’s absurdist play, “Waiting for Godot” comes to mind, in which the guy they expect to provide salvation never shows up.

The weekly average 30-year fixed mortgage rate rose to 7.40% in the latest reporting week, according to Freddie Mac. Mortgage rates have been in the 6% to 8% range since September 2022, which used to be considered normal to low in the decades before the Fed’s financial repression.

And it‘s also that the home price explosion from mid-2020 to mid-2022, fueled by these QE-and-ZIRP-based mortgage rates and FOMO, has blown home prices out of all proportion.

But as buyers and sellers are trying to find common ground, those prices have started to correct to the downside in many markets: Austin, TX -26%; Oakland, CA -23%; New Orleans, LA -20%; Cape Coral and Fort Myers, FL -18%; Birmingham, AL -17%; McKinney, TX, -14%, etc. Realistic pricing would repair this broken housing market. Here are prices of mid-tier single-family homes in Austin through September:

Supply of existing homes has soared to the highest level for any September in 11 years, as sales have plunged, and as inventories have risen.

Pending home sales by region.

In the South, pending sales plunged by 8.2% in September from August, to the lowest volume on record, seasonally adjusted.

Compared to September in prior years:

2025: -12.0% (year-over-year)
2024: -11.2%.
2023: -11.0%
2022: -18.8%
2021: -42.8%
2019: -36.9%.

In the West, pending sales plunged by 9.2% in September, to the lowest volume in the data.

Compared to September in prior years:

2025: -15.0% (year-over-year)
2024: -21.1%
2023: -13.5%
2022: -22.4%
2021: -51.8%
2019: -49.6%.

In the Midwest, pending sales plunged by 6.5% month-to-month, seasonally adjusted, to the lowest volume on record.

Compared to September in prior years:

2025: -8.7% (year-over-year)
2024: -10.1%
2023: -10.3%
2022: -17.7%
2021: -39.9%
2019: -33.8%.

In the Northeast, pending sales fell by 4.2% month-to-month, seasonally adjusted. There had been three months last winter and April 2020 when sales had been even lower.

Compared to September in prior years:

2025: -9.4% (year-over-year)
2024: -9.8%
2023: -7.1%
2022: -18.4%
2021: -35.8%
2019: -36.9%.