Pending Home Sales Sink to Their Weakest October Since 2018

Mortgage costs climbed 12.8% from a year earlier as rates moved above 7%, disrupting deals and pushing rents to a 19-month high in annual gains.

With mortgage rates firmly above 7%, US housing activity took a hard hit in October. Newly pending listings dropped 16.8% from a year earlier, marking the steepest annual decline since August 2023 and the softest October for contract signings since 2018, according to Zillow’s October Market Report.

Completed home sales also fell 8.7% year over year. Zillow’s preliminary tally showed 304,105 transactions, down 5.4% from September.

Most of those closings reflect deals signed in September, when rates briefly slipped below 7%.

The October pending numbers, however, suggest an even sharper slowdown for November closings.

Rising mortgage costs are changing buyer behavior

The estimated monthly mortgage payment on a typical US home reached $2,004 in October, based on a 20% down payment and excluding taxes and insurance. That was up 12.8% from a year earlier and 4.8% higher than September, the biggest one-month jump in four years.

For Federal Housing Administration (FHA) borrowers putting down 5%, the increase from a year earlier was 11.8%.

Including taxes, insurance and maintenance, a median-income household would spend 41.5% of monthly income to own the typical home, up from 39.2% a year earlier.

Freddie Mac said mortgage rates averaged 7.33% in October, up from 6.86% in September.

Even with weaker demand, Zillow’s Home Value Index put the typical US home at $364,812, only 0.7% above year-earlier levels, indicating sellers have not significantly lowered asking prices.

“The acute sting of suddenly higher mortgage rates is having the unfortunate effect on the housing market that last month’s pending sales data foretold,” said Mischa Fisher, Zillow chief economist.

“The next month is likely to show an even larger contraction, but the silver lining is that it may be the worst of the slowdown. I expect the pace to ease into the new year. There are deals to be had for buyers able to brave the affordability headwinds in the coming months, and the continued inventory buildup means there is a lot of upside for sales into next year if we get rate relief.”

Satyan Merchant of TransUnion says delinquency rates have been gradually increasing since 2021, with FHA lending driving much of the movement, while resilient employment and home equity continue to support homeowners. https://t.co/sIqVD6dC38

— Mortgage Professional America Magazine (@MPAMagazineUS) November 6, 2026

Brokers are coping with a stalled market

The pressure is being felt most clearly by brokers. Kevin Oto, broker owner at Green Haven Capital in Sacramento, California, wrote in Mortgage Professional America’s Broker Intel that fully qualified buyers are now hesitating at the final step.

“Buyers who surmount every financial hurdle present some of my hardest conversations, these days,” he said.

In an earlier column, Oto described a broader shift in buyer psychology.

“Higher payments haven’t eliminated demand. They’ve raised the standard a property has to meet before a buyer feels comfortable acting,” he said.

As buying activity slows, the rental market is still firming. Zillow’s Observed Rent Index put the typical US rent at $1,913 in October, up 2.9% from a year earlier, the strongest annual increase in 19 months and the seventh straight month of rising yearly growth.

Active inventory reached 1.4 million homes, 3.4% above the level a year earlier.

Homes spent a median of 31 days before going pending, two days longer than a year earlier, as the market continued to cool.