Pending Sales See Largest Monthly Decline In Three Years – The Mortgage Note

U.S. pending home sales saw their largest monthly decline in more than three years, as mortgage rates above 7% priced out would-be buyers.

September brought a sharp drop in buyer activity, with pending sales slipping 4% from August to their lowest point since 2014 excluding the pandemic-induced dropoff in 2020, Redfin reported.

All 50 of the country’s most populous metros saw sales slip YOY for the first time in three years. Seattle recorded the steepest drop at 24.4%, followed by Los Angeles at 16% and San Diego at 15.8%. Closed sales fell 1.6% nationwide from August to their lowest level since late 2023.

Rate-sensitive would-be buyers dropped out of the market as borrowing costs surpassed 7%, even as inventory improved in much of the country.

The result is a market mismatch: home shoppers could be benefitting from less competition and more supply to choose from, taking advantage of price cuts and other seller concessions. But rate dynamics are pricing people out and extending the freeze that has gripped the housing market through 2026.

Active buyers cancelled deals at their highest rate in Redfin’s records, with 14.5% of deals falling through last month.

Jacksonville, FL, had the highest cancellation rate among major cities at 19.9%, followed by Tampa (18.8%) and Las Vegas (18.6%). Redfin attributed the cancellations to buyers having more options and greater flexibility to walk away from deals.

“It’s not surprising that when rates climb above 7%, fewer people buy homes because fewer people can afford them,” said Chen Zhao, Redfin’s head of economic research.

“For buyers, less competition means more room to negotiate: on price, on closing costs, on repairs, and sometimes sellers even pay for a mortgage-rate buydown. Slow sales also mean prices may flatten or fall in the not-so-distant future. Sellers should remember that while many house hunters have pulled back, there are some people who need to move and are still buying homes.”

For those still moving in 2026, being closer to family is a leading reason, followed closely by new jobs or company transfers. Remote work gives high earners greater flexibility to relocate near loved ones.

Affordability is another major factor, with many families selling in high-cost areas and moving to metros where their monthly budgets go further.

“My best advice for sellers in this environment is to price realistically from the start and lean into any flexibility you can offer; a rate buydown or covering closing costs can go a long way when buyers are stretched thin,” Zhao added.