U.S. homebuying activity weakened sharply in September 2026 as mortgage rates climbed above 7%, pushing pending sales to their lowest level in more than a decade outside the early-pandemic shutdown and giving buyers greater leverage in an increasingly competitive market for sellers.
Pending home sales fell 4% from August on a seasonally adjusted basis, the steepest monthly decline in more than three years, according to Redfin data released this week. The number of homes going under contract dropped to its lowest level since spring 2014, with the exception of April 2020, when the onset of the Covid-19 pandemic brought much of the housing market to a standstill.
The pullback was nationwide. Pending sales declined year over year in all 50 of the most populous U.S. metropolitan areas for the first time in three years, a pattern last recorded in September 2023, when mortgage rates also exceeded 7% for a sustained period.
The weekly average mortgage rate reached 7.28% at the end of September, its highest level in three years, compounding the affordability pressures created by elevated home prices and economic uncertainty.
“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.
The slowdown is reshaping the balance of power between buyers and sellers. The nationwide supply of homes for sale increased 1.2% from August to its highest level since March 2020, while nearly 15% of home purchase agreements were canceled in September, the largest share in Redfin’s records outside the extraordinary disruption of the pandemic’s opening months.
The figures point to a housing market increasingly characterized by abundant choices, greater negotiating power for buyers and mounting pressure on sellers to price properties competitively.
West Coast markets lead the downturn
The steepest declines in pending sales occurred along the West Coast, where high housing costs leave buyers particularly vulnerable to increases in borrowing costs.
Seattle recorded a 24.4% year-over-year drop in pending sales, followed by Los Angeles at 16%, San Diego at 15.8% and Anaheim, California, at 15.5%. Seattle’s uneven local job market has also weighed on demand, while the high prices in Southern California have pushed more prospective buyers beyond their budgets.
Closed home sales declined 1.6% from August nationwide, reaching their lowest level since late 2023. Because completed transactions generally reflect purchase agreements negotiated weeks earlier, September’s closings largely captured decisions made in July and August, as mortgage rates rose and economic uncertainty discouraged prospective buyers.
Prices show signs of losing momentum
Although home prices continued to rise nationally, the pace of appreciation slowed. The median U.S. sale price increased 1.3% from a year earlier to $393,895 in September, the smallest annual gain since February.
The median asking price fell 0.5% from August and was up just 0.6% year over year, its smallest annual increase since April.
Negotiating power is increasingly shifting toward buyers. About 60.5% of homes sold in September closed below their original asking prices, extending an 18-month pattern in which roughly three in five properties sold for less than their initial list price. Meanwhile, 19.8% of sellers with active listings reduced their asking prices during the month, and the share of sellers cutting prices increased in 43 of the 50 largest metropolitan areas.
Regional differences remain substantial. San Francisco recorded the strongest annual increase in median sale prices, at 14.6%, followed by Cleveland at 7.9% and St. Louis at 6.7%. Prices declined most in Seattle, falling 4.4%, followed by San Jose, California, at 3.4% and Denver at 2.6%.
The combination of slowing price growth, more available homes and fewer competing offers could improve buyers’ bargaining positions, although mortgage financing costs remain a significant obstacle.
More homes on the market, fewer buyers
The total number of homes for sale rose 1.2% from August, reaching its highest level since March 2020. New listings increased just 0.3% month over month, suggesting that the growing inventory reflects a gradual accumulation of properties as buyers retreat rather than a sudden surge in sellers entering the market.
That imbalance is changing the economics of selling a home. Properties that once attracted multiple offers shortly after listing may now remain on the market unless sellers adjust prices and presentation to match local competition.
“For the last decade, there was almost a certainty that if you listed a home, it would sell–and it would usually sell quickly, with multiple offers,” said Brian Connelly, a Redfin Premier agent in Boston.
Connelly said sellers increasingly need to price aggressively and prepare properties carefully to avoid prolonged marketing periods, subsequent price reductions or withdrawing listings altogether.
Redfin’s Zhao said buyers facing high monthly payments may have opportunities to negotiate not only on purchase prices but also on closing costs, repairs and mortgage-rate buydowns paid for by sellers.
Contract cancellations reach a record outside the pandemic
The shift toward a buyer-favorable market is also showing up in failed transactions. Nationwide, 14.5% of home purchase agreements fell through in September, the highest share in Redfin’s records outside March and April 2020, when pandemic-related disruptions were extraordinary.
With more properties available and less competition, buyers have greater freedom to abandon transactions when inspections reveal problems, financing costs prove unaffordable or they reconsider a purchase.
Florida markets were particularly exposed. Jacksonville had the highest cancellation rate among the 50 most populous metropolitan areas, at 19.9%, followed by Tampa at 18.8%. Las Vegas recorded 18.6%, San Antonio 18.5% and Phoenix 18.4%.
At the other end of the spectrum, just 2.8% of contracts fell through in San Francisco. Nassau County, New York; San Jose, California; Montgomery County, Pennsylvania; and New York also recorded cancellation rates below 8%.
The contrast reflects differing market conditions: where buyers have numerous alternatives, they are better positioned to walk away, while tighter markets can give sellers greater leverage to keep transactions on track.
A market increasingly divided by affordability
September’s figures underscore the sensitivity of U.S. housing demand to borrowing costs. With the average weekly mortgage rate at 7.28%, even modest changes in financing expenses can materially affect monthly payments, particularly in expensive coastal markets.
The supply-demand imbalance is also becoming more visible. Active listings rose sharply year over year in Seattle, San Jose and Boston, while several Florida markets recorded declines. In Fort Lauderdale, the typical home that went under contract did so in 86 days, 20 days faster than a year earlier. By contrast, the time required to secure a buyer increased by 16 days in Tampa and 12 days in Orlando.
For buyers, a growing inventory and a greater willingness among sellers to negotiate offer some relief from years of intense competition. But lower asking prices alone may not restore affordability if financing costs remain elevated.
For sellers, the environment is less forgiving. Realistic pricing, property condition and flexibility on closing costs or mortgage-rate buydowns are becoming more important as prospective buyers gain alternatives.
The central question for the housing market is whether easing price pressures and increased negotiating power will eventually draw buyers back–or whether elevated mortgage rates will continue to suppress transactions, leaving inventory to accumulate and price growth to slow further.
For now, September’s data suggest that the market is adjusting less through a surge in new supply than through a retreat in demand, with the consequences increasingly evident in falling contract activity, rising cancellations and a more difficult environment for sellers.
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