Fewer buyers signed contracts in September in every U.S. region, an early sign that rapidly rising mortgage rates are cooling fall home sales.
Pending home sales fell 7.3% in September from August and 11.3% from a year earlier, the National Association of Realtors (NAR) reported October 20.
Contract signings declined month over month in all four major U.S. regions. The West fell the most at 9.2%, followed by the South at 8.2%, the Midwest at 6.5% and the Northeast at 4.2%.
Infographic: National Association of Realtors / nar.realtor
“Market conditions weakened in September due to fast-rising mortgage rates,” said NAR Chief Economist Dr. Lawrence Yun. “Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates.”
Yun sees a possible peak ahead. “Given that mortgage rates have already risen much more than the Federal Reserve’s short-term interest rate hikes, mortgage rates could be topping out,” Yun said. “However, increasing energy prices and the resulting inflationary pressure are highly uncertain.”
He also pointed to stable prices. “Despite the difficulty of obtaining a mortgage, the limited number of distressed properties is ensuring steady home prices,” Yun added. “Buyers and sellers may simply be holding back until mortgage rates move favorably.”