Pending home sales fell across the largest American metropolitan areas as elevated mortgage rates pushed monthly housing payments near record levels.
Contracts fall to a new low
The U.S. housing market recorded another sign of weakness as pending home sales fell to their lowest level in records dating back to 2021, according to a report released by Redfin on October 22.
The real estate brokerage reported that pending sales declined 1.9% week over week for the four weeks ending October 18. The decrease followed a second consecutive week in which pending transactions fell across all 50 of the country's most populous metropolitan areas.
Pending sales measure homes under contract but not yet closed. Because a transaction can take several weeks to complete, the measure offers an early indication of demand before final sales statistics become available.
The decline suggests that prospective buyers continued to face barriers when deciding whether to proceed with a purchase. It does not mean that every local housing market experienced identical conditions, but the nationwide pattern indicates widespread pressure.
Mortgage costs weigh on buyers
Mortgage rates remained elevated during the reporting period. Freddie Mac reported that the average 30-year fixed mortgage rate stood at 7.32% for the week ending October 22, down from 7.40% the previous week.
Although the decline offered some relief, the rate remained above the level recorded a year earlier. The difference matters because mortgage interest affects both monthly payments and the total cost of borrowing over time.
Redfin reported that the typical monthly housing payment for a homebuyer reached $2,796, the second-highest level in its records.
The burden of housing expenses extends beyond the mortgage payment. Buyers also need to consider taxes, homeowners insurance, maintenance and potential repairs. These costs can limit the amount households can spend on a property even when they qualify for a loan.
For first-time buyers, the challenge can be particularly pronounced because they may have limited savings and less equity available to use toward a down payment.
Prices show signs of slower growth
The median home-sale price rose just 0.2% year over year in Redfin's reporting, following two weeks of 0.1% annual increases.
The slower growth indicates that prices were losing momentum in the measure cited. However, a slowdown in appreciation is different from a broad or sustained decline in home values.
Housing prices vary by region, neighborhood, property type and condition. National data can show the direction of the wider market without establishing what a particular property is worth.
For sellers, slower price growth and declining contracts may increase the importance of setting realistic asking prices. Buyers, meanwhile, may have more reason to compare available properties and assess whether the total cost of ownership fits their budgets.
New supply also declines
Fresh listings fell 1.4% week over week, reaching their lowest level since July, according to Redfin.
The decline suggests that fewer homeowners were bringing properties to market during the reporting period. Sellers may be reluctant to move when they are uncertain about the price they can obtain or face higher financing costs on their next home.
This creates a complicated environment. Weak buyer demand can slow transactions, while fewer new listings can limit the supply of properties entering the market.
The result can vary across local markets. Some areas may have a relatively broad selection of homes, while others may have limited options at prices suitable for first-time buyers.
What buyers and sellers should understand
The latest figures show why a single market indicator cannot fully explain residential housing conditions. Pending sales, mortgage rates, monthly payments, prices and new listings provide different information about demand and supply.
A decline in pending transactions can precede lower completed sales, but the final effect depends on whether contracts proceed and how future demand develops.
The data also do not establish that all homeowners need to reduce their asking prices or that buyers should automatically delay purchases. Individual decisions depend on personal finances, housing needs and local conditions.
Affordability remains central
The October report highlights a persistent mismatch between the cost of purchasing a home and the financial capacity of many prospective buyers. Even with a small weekly decline in mortgage rates, monthly payments remained elevated and pending sales weakened.
For the residential real estate industry, the key issue is whether financing conditions and household purchasing power can improve enough to support stronger transaction activity.
The latest figures provide a clear indication of continuing pressure, but subsequent housing data will be needed to determine whether the decline represents a sustained trend or a temporary phase of market weakness.
Best Houses Contributor
Covers residential real estate and the agents behind it, from listings and design to the deals that close.
This article features partner, contributor, or branded content from a third party. Members of the Best Houses editorial staff were not involved in the creation of this content. All views and opinions are those of the contributor alone.
