U.S. Pending Home Sales Drop to 12-Year Low as Buyer Cancellations Surge
Affordability is becoming an issue for many potential homebuyers in the U.S. as the number of pending home sales dropped 4% in September 2026 from the August numbers. The fall to the lowest level for the data since spring 2014 (excluding the April 2020 numbers during the pandemic) comes as mortgage rates have surged past 7% on average for the end of the month to 7.28%, making homes unaffordable for many.
Data from Redfin further establishes the shift happening across the entire country of housing markets. All 50 of the largest US metropolitan areas saw year-over-year declines in their pending home sales figures. Sellers are seeing a significant portion of signed purchase agreements pulled by home buyers. This occurs in 14.6% of cases this past month, making it the highest cancel rate outside of early pandemic days.
Some of the largest markets on the West Coast, including Seattle (down 24.4%), the Southern California markets of Los Angeles and San Diego (down 22.9% and 21.3% respectively), are among the largest decliners in terms of year-over-year home sales. These are high-priced markets with additional stress of local economic woe which is preventing additional home purchases.
Price growth is slowing. Median home sales prices across the US increased just 1.3% over the past 12 months to $393,895. In more than half of local markets, homes are selling for less than their listed price. More than 1 in 5 listings have had their prices cut, and sellers are likely to have to do even more to attract reluctant buyers.
Of note, the appreciation of home prices is by no means uniform across markets. For example, San Francisco home prices rose 14.6% over the past 12 months to a median home price of $1.29 million. Conversely, the home prices of Seattle and San Jose have fallen over the past year to median home prices of $923,000 and $1.42 million, respectively.
Inventory is up 1.2% from August, and it’s now at its highest point since March 2020. Note, however, that the increase in inventory is primarily due to buyers pulling back on their home searches, not an influx of new home sellers on the market. With buyers behaving in such a manner, a thorough market timing strategy, along with corresponding home pricing, is more important than ever.
Buyer retreat is at its greatest in Florida where cancellations of contracts to purchase have risen to almost 20% in Jacksonville, the worst performing market in the country. Tighter, more expensive markets such as San Francisco on the other hand are seeing few cancellations as they are being held by would be sellers who are reluctant to list their homes in a competitive market.
Elevated mortgage payments are a major impediment to home sales. The added burden to home buyers’ effective purchasing power constrains the extent to which lower home prices will stimulate activity. Therefore, in order to attract home buyers, sellers will need to lower their asking prices and be willing to offer incentives, such as concessions.
What This Means for Your Portfolio:
- Focus on areas that are performing relatively well, such as San Francisco or Cleveland rather than depressed areas of the West Coast where prices are declining and cancellations are increasing.
- Be realistic in your pricing and include room for negotiation in your offer. Price reductions and seller concessions are becoming more normal.
- Track mortgage rates. The impact of small changes in finance costs on affordability is much greater than that of changes in house prices.
- Local economic indicators (e.g., employment rates, new jobs, etc.) for emerging or transitional markets provide insight into future housing market performance.
It is now even more challenging for investors. Although inventory is increasing and therefore at some point prices will have to fall, it is not yet clear whether this will happen faster than the interest rates are dropping again. The next few quarters will be very interesting for all parties involved.
