US pending home sales hit record low as mortgage rates near 7.4%

Contracts to buy existing homes in the United States fell to a record low in September 2026, the National Association of Realtors (NAR) said on Tuesday, October 20, 2026. Its Pending Home Sales Index dropped 7.3% from August to 66.0, the lowest reading since the series began in 2001. Economists had expected a fall of only about 0.5%. The slump came as the average 30-year fixed mortgage rate rose to about 7.4%, the highest in nearly three years, according to mortgage finance company Freddie Mac.

Pending home sales are a forward-looking measure. They count contracts that have been signed but not yet completed, and most of those sales close one or two months later. A record low in September therefore points to weak completed home sales in October and November. Housing is a big part of the US economy: when people buy homes, they also spend on furniture, appliances, repairs and services, so a slowdown spreads well beyond estate agents.

The main cause is the cost of borrowing. Most Americans buy homes with long-term mortgages, and a jump in rates sharply raises monthly payments. Rates have been rising along with yields on US government bonds, which in turn have been pushed up by inflation worries linked to the war involving Iran and the resulting rise in energy prices. When fewer buyers can afford homes, sellers also hold back, leaving the market stuck. The fall was broad: every one of the four US regions recorded a decline, with the West, where home prices are typically highest, falling the most at 9.2%. That suggests the weakness is not limited to one local market but reflects the national rise in borrowing costs.

For India, the US housing slowdown matters in indirect ways. A weaker US economy can reduce demand for Indian exports and services, and higher US interest rates tend to pull investment money towards US bonds, which can weigh on the rupee and on foreign investment flows into Indian markets. Indian families planning to buy property in the US, or students and workers renting there, also face higher costs.

Short-term: Completed US home sales are likely to stay weak in the coming months. Builders and estate agents face fewer deals, and some sellers may cut prices or withdraw homes from the market.

Long-term: If mortgage rates peak and begin to ease, as NAR's chief economist suggested they might, demand could recover. If inflation from energy prices keeps rates high, the housing slump could deepen and weigh on US growth.

Who is affected: US home buyers and sellers; mortgage lenders and builders; workers in construction and real estate; investors watching US growth and interest rates; and, indirectly, countries such as India whose exports and capital flows are linked to the US economy.

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