US Pending Home Sales Stall as Labor Market Concerns Build

A "Sale Pending" sign in front of a home in Pinole, California.

(Bloomberg) -- Pending sales of existing US homes stalled in September, suggesting anxiety about the job market kept potential buyers sidelined despite a welcome easing in mortgage rates.

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An index of contract signings held at 74.8 after climbing a revised 4.2% a month earlier to the highest level since March, according to National Association of Realtors data released Wednesday. Economists expected a 1.2% increase, based on the median estimate in a Bloomberg survey.

“A record-high stock market and growing housing wealth in September were not enough to offset a likely softening job market,” NAR Chief Economist Lawrence Yun said in a statement. Nonetheless, “mortgage rates are trending toward three-year lows, which should further improve affordability, though the government shutdown could temporarily slow home sales activity.”

Even with middling results for last month, housing economists see the resale market slowly thawing after several years of lackluster demand. Mortgage rates have shown signs of stabilizing below 6.5%, and home prices are cooling.

Moreover, the so-called “lock-in effect” — in which homeowners resist selling because of their existing low-rate mortgages — is waning and helping to boost inventory.

Figures out Tuesday from S&P Cotality Case-Shiller showed buyers are gaining leverage in negotiations with sellers. A national measure of home prices rose 1.5% in August from a year ago, the smallest annual gain since mid-2023.

By region, contract signings on previously owned homes rose 1.1% in the South to the highest level since March. Pending sales also climbed in the Northeast, while falling in the West and Midwest.

The broader housing market has experienced more momentum recently, with new-home sales surging in August to the highest level since 2022. While some economists chalked up the sharp advance to monthly volatility, builders are using price cuts and sales incentives to drive buyer interest.

Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they’re sold.

--With assistance from Chris Middleton.

(Updates with chart)

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