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Pending home sales fell 4% in September, the steepest decline since 2014, and contract cancellations surged to 14.5%, according to Redfin. The surge in cancellations and the rise in available inventory – the highest level since March 2020 – signal that buyers are pulling back amid steep mortgage rates.
First‑time buyers are pressing for price cuts, but 7% mortgage rates are keeping deals fragile, limiting the ability of sellers to lower prices without hurting their margins. This buyer‑side pressure is adding to a broader market slump; analysts note the housing market is on track for its steepest downturn in four decades, driven by four consecutive interest‑rate hikes and recent tax‑concession changes that shaved 1.1% off residential values in just one month.
Why it matters: The combination of falling pending sales, high cancellation rates, and persistent high borrowing costs suggests a weakening demand curve. Home‑price appreciation that powered the market for years is now eroding, which could dampen construction activity, reduce consumer wealth, and weigh on overall economic growth.
What to watch next: Monitor the Federal Reserve’s policy stance for any easing that could lower mortgage rates, watch new listings and inventory trends for signs of oversupply, and keep an eye on buyer sentiment surveys for shifts in willingness to pay amid high rates. Any stabilization in pending sales or a slowdown in cancellation rates would be an early indicator that the market may be bottoming out. [[1, 2]]