US Home Sales Slump as Mortgage Rates Hit 3-Year High
US pending home sales dropped to their lowest level since 2014 as mortgage rates climbed toward 7.5%, driven by inflation and geopolitical instability.
U.S. pending home sales fell 4% in September 2026, reaching their lowest level since spring 2014, excluding the 2020 pandemic freeze. According to Redfin, the decline was driven by mortgage rates climbing to 7.28% by the end of the month, a trend that affected all 50 of the most populous U.S. metros. The West Coast saw the sharpest declines, with Seattle posting a 24.4% year-over-year drop in pending sales.
Existing home sales showed a slight monthly increase of 1.5% in September to a seasonally adjusted annual rate of 3.99 million units, according to the National Association of Realtors. However, this remains far below the historic norm of 5.2 million units, and annual sales fell 2.2% compared to the previous year. Mortgage rates continued to climb into early October, reaching 7.49%. These borrowing costs have risen since February 2026, fueled by inflation expectations and surging oil prices following the start of a war between the United States and Iran.
Market conditions are shifting toward a buyer's market as unsold inventory rose to 1.6 million homes, the highest level since November 2019. While the median sales price reached an all-time September high of $417,500, price growth is losing momentum. Redfin reported that 60.5% of homes sold for less than their original asking price, and 14.5% of deals fell through, the highest share in the company's records.
