September Data Shows Housing Slows as Rates Rise
Pending U.S. home sales fell in September as mortgage rates climbed, while housing starts and building permits also declined. Homebuilder sentiment reached a…
Rising mortgage costs weighed on U.S. homebuyers in September. New data reported by CNBC show pending home sales fell 7.3% from August, while housing construction and builder sentiment also weakened.
The figures point to pressure across both sides of the market: buyers faced higher borrowing costs, and builders reported weaker sales expectations. Pending sales were down 11.3% from a year earlier, according to the National Association of Realtors.
The average rate on a 30-year fixed mortgage started September around 6.8% and reached 7.6% by the end of the month, according to Mortgage News Daily. The sales measure tracks signed contracts on existing homes, so it reflects buyers shopping during that period.
September data shows housing strain
Lawrence Yun, the National Association of Realtors' chief economist, said job growth and income gains can support purchases, but mortgage rates have a stronger effect on affordability. “Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates,” he said in a release.
Sales fell across the country. The largest monthly declines came in the West, down 9.2%, and the South, down 8.2%, according to the report. The South is usually the most active market, while the West is the most expensive.
The construction figures were weak, too. Housing starts fell 4.56% to 859,000 annualized, according to the U.S. Census. That was the lowest level since September 2025. Building permits, which signal future construction, declined 4% for the month.
That matters beyond homebuilders. Fewer construction projects can limit the supply of new homes, while higher mortgage costs make monthly payments harder to manage for prospective buyers. The reported figures show both pressures arriving together, though they do not establish how much either factor will change home prices.
Builders see little near-term relief
An October reading of homebuilder sentiment reached its lowest point in 14 years, CNBC reported, citing the National Association of Home Builders. Current sales, expectations for future sales and buyer traffic all declined; buyer traffic registered the weakest level.
Robert Dietz, the association's chief economist, said demand remains, but affordability challenges, construction costs and weaker consumer confidence are keeping more buyers out of the market. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines,” he said in a release.
Builders are also working through existing projects. Ben Ayers, a senior economist at Nationwide Financial, said many are using price cuts and incentives to sell current developments, squeezing profit margins. He expects construction activity to remain weak into 2027 and said single-family starts could stay low for much of the next year.
Ayers said reduced residential construction could weigh modestly on economic growth. For buyers, the immediate numbers offer little sign of easing: the average 30-year fixed mortgage rate reached 7.6% by September's end.
Source: cnbc.com
