pending home sales a measure of signed contracts on existing homes dropped a much worsethanexpected 102 in september from august according to the national association of realtors economists had predicted a 4 drop sales were down 31 year over year this marks the lowest level on the pending sales index since june 2010 excluding april 2020 when the covid pandemic was in its early days realtors point squarely to sharply higher mortgage rates which had sat at record lows for the first two years of the pandemic the average rate on the popular 30year fixed mortgage was right around 3 at the start of this year but then rose swiftly crossing 6 in june according to mortgage news daily it pulled back a bit in july and august but then began rising again crossing 7 in september when these contracts were signed persistent inflation has proven quite harmful to the housing market said nar chief economist lawrence yun the federal reserve has had to drastically raise interest rates to quell inflation which has resulted in far fewer buyers and even fewer sellers mortgage demand and new listings are dropping too because homeowners are unwilling to give up their recordlow interest rates to trade up to a much higher one for potential buyers the increase in rates means the monthly payment on a median priced home with a 20 down payment is now close to 1000 higher than it was in january with wages falling behind on account of inflation and rates rising buyers purchasing power has been reduced by over 100000 said george ratiu senior economist at realtorcom as we look to the remainder of the year we can expect interest rates to continue their upward trajectory the federal reserves monetary tightening has not yet made a dent in inflation which means that the bank is expected to hike its policy rate further he added while redhot home prices are starting to cool and even drop in some local markets the decline is not enough to make up for the increase in interest rates home prices are up more than 40 since the start of the pandemic fueled largely by those rockbottom interest rates early on regionally pending home sales dropped 162 monthtomonth in the northeast and were down 301 year over year in the midwest sales were down 88 for the month and 267 from one year ago in the south sales retreated 81 for the month and were down 300 year over year and in the west the most expensive region in the nation sales fell 117 for the month and were down 387 from the year before