Rising borrowing costs are putting intense pressure on the United States housing market, where existing home sales recorded only a modest monthly gain in September while pending transactions fell sharply. Data published by the National Association of Realtors (NAR) on October 13, 2026, showed that completed sales increased 1.5% from August to a seasonally adjusted annual rate of 3.99 million, but remained near their lowest levels of the year.
According to the NAR, existing home sales were down 2.2% from September 2025. Meanwhile, a separate Redfin report published October 12 found that pending home sales declined 4% month over month, marking their largest monthly drop in more than three years and bringing activity close to levels last seen in 2014, outside the pandemic disruption in 2020.
Mortgage Rates Climb to Three-Year Highs
Mortgage rates climbed above 7% during September, reaching a weekly average of 7.28% by month-end, the highest level in three years, according to Redfin. Freddie Mac data similarly highlighted the upward trajectory, driven by broader macroeconomic shifts, rising oil prices, and climbing 10-year Treasury yields.
The National Association of Realtors’ sales figures largely reflect transactions agreed upon in August, before borrowing costs reached their recent peaks. Market analysts note that a 7% interest rate acts as both a mathematical and psychological barrier for everyday buyers, slowing down touring activity and dampening market momentum during a time of year when leverage typically shifts toward purchasers.
Sellers Face Tough Choices Amid Slowdown
With prospective buyers increasingly pushed to the sidelines, homeowners looking to sell are facing difficult decisions. Real estate experts indicate that sellers may need to slash prices or delist their properties altogether if current market conditions persist.
- Existing home sales rose a modest 1.5% in September to an annual rate of 3.99 million.
- Pending home sales suffered a 4% month-over-month drop, according to Redfin data.
- Average 30-year mortgage rates surpassed 7%, hitting three-year highs.
- Inventory levels remain modestly higher than the previous year, providing remaining buyers with increased leverage.
Although housing inventory has experienced slight year-over-year gains, the lack of affordable financing options continues to constrain overall market activity. Economists suggest that sustained recovery will depend heavily on broader inflation trends, Federal Reserve policy adjustments, and stabilization in the bond market.
