September Housing Data Shows Deeper Market Slowdown

The U.S. housing market weakened sharply in September, with both future home sales and new construction falling more than analysts expected. Pending sales dropped 7.3% from August and 11.3% from a year earlier, reaching the lowest point in records dating to 2001. For buyers, that signals fewer completed purchases ahead. For sellers, it points to a smaller pool of active shoppers.

New-home activity also slipped. Housing starts declined 5.2% month over month, while permits edged down 0.2% instead of rising. Single-family permits fell 4% from August to 845,000, the lowest level since 2023. Builder confidence also sits at a 14-year low. Mortgage rates stayed above 7% through most of September and finished near 7.6%, compared with roughly 3% five years earlier.

The housing slowdown is colliding with the Federal Reserve’s continuing effort to reduce inflation. Markets expect no rate change at the Fed’s next meeting, but investors see a strong possibility of a quarter-point increase in December and another in March 2027. Goldman Sachs expects affordability pressure to weigh more heavily on housing activity in 2027, while many homeowners remain reluctant to move because their existing mortgages carry much lower rates. The National Association of Realtors’ chief economist said mortgage rates may be near their peak, which could give buyers and sellers reason to wait.