U.S. housing market stays stuck amid high rates

U.S. housing activity — a proxy for replacement and home improvement demand — remains challenged.

What’s happening: Pending home sales in September fell 7.3 percent month-over-month — and 11.3 percent year-over-year — with declines across all four major regions, the National Association of Realtors reported Tuesday.

• Meanwhile, single-family housing starts during the month declined by more than 4 percent from August, according to Census Bureau data also out Tuesday, hitting the lowest level since September 2025. 
• Building permits for single-family homes also fell 4 percent month-over-month. 

The backdrop: The 30-year fixed mortgage rate is hovering over 7 percent, nearing a three-year high. 

• Oxford Economics estimates that higher rates since the beginning of 2026 have put homeownership out of reach for an additional five million people, per CoStar.

Of note: The Northeast has seen an 8.3 percent year-to-date rise in single-family and multi-family housing starts, in contrast to declines across the rest of the U.S., the National Association of Home Builders (NAHB) noted. 

What they’re saying: “Housing remains squeezed by supply-side constraints and significant affordability challenges,” NAHB chief economist Robert Dietz said in a Tuesday statement. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines.”

Looking ahead: According to Nancy Van Houten, lead economist at Oxford Economics, the most qualified homebuyers are the ones who locked in low mortgage rates during the pandemic, keeping the market stagnant. 

• “We don’t expect a meaningful improvement in housing activity until around the end of 2027, when we look for mortgage rates to decline,” she said.