1 in 7 Home Deals Collapsed in September as Mortgage Rates Hit 7.4%

Nearly one in seven signed home-purchase agreements in the United States fell apart in September — a cancellation rate that, outside the first months of the COVID-19 pandemic, is the highest Redfin has ever recorded. The figure lands as mortgage rates have climbed back above 7.4%, erasing most of the relief buyers saw earlier in the year.

Redfin's data puts the September contract cancellation rate at 14.5%, the highest share for any September in its records. At the same time, pending home sales — signed contracts not yet closed — fell 4% from August, the steepest monthly drop in more than three years, and reached their lowest level since spring 2014, apart from the pandemic shutdown of April 2020. The decline was universal: pending sales fell year over year in all 50 of the largest metropolitan areas.

The geography of cancellations maps almost exactly onto where buyers have the most leverage. Jacksonville, Florida led major markets at 19.9%, followed by Tampa at 18.8%, Las Vegas at 18.6%, San Antonio at 18.5%, and Phoenix at 18.4%. In San Francisco, where competition among buyers remains relatively strong, just 2.8% of deals fell through, according to Redfin.

Buyers walk away from signed contracts for a range of reasons — failed inspections, financing problems, or a simple change of heart. But Redfin's data shows cancellations run highest where buyers have the most options and negotiating power. Nationally, Redfin counts 63% more sellers than buyers, a gap that stood at 46.9% in May and just 6.5% in 2024.

The rate environment is the central driver. Freddie Mac's 30-year fixed mortgage rate reached 7.40% in its October 8 survey, up from 7.28% the week before and from 6.30% a year ago. Rates had fallen as low as 6.01% in February — a three-year low — before reversing. The September monthly average was 6.86%, meaning the sharpest part of the recent climb came after most September contracts were already signed.

Fewer buyers can qualify.— Lawrence Yun, Chief Economist, National Association of Realtors

That timing creates a split in the data that matters for understanding what comes next. The National Association of Realtors reported existing-home sales rose 1.5% in September to an annualized rate of 3.99 million — a figure that largely reflects contracts signed in July and August, before rates jumped. Redfin's own closed-sales figure for September fell 1.6% to its lowest since late 2023. Both series agree that sales are down year over year across all four regions.

Contract data leads closing data by roughly one to two months. The 4% drop in pending sales and the 14.5% cancellation rate in September point toward weaker closed-sale figures in October and November, even though September's NAR closing number moved up. The two organizations use different data sources and seasonal adjustments, so a small monthly divergence is not unusual, according to alphapilot.tech.

Sellers are already adjusting. Redfin found that 60.5% of homes sold in September closed below their original asking price, and 19.8% of active sellers cut their list price during the month. The median sale price was $393,895, up 1.3% from a year earlier — its slowest annual gain since February, according to wrenews.com. NAR put the median at $417,500, also up 1.3% year over year. Inventory rose to 1.60 million homes nationally, a 4.8-month supply and the highest level since March 2020.

Some of the sharpest year-over-year declines in pending sales were concentrated on the West Coast. Seattle recorded a 24.4% drop, Los Angeles fell 16%, San Diego 15.8%, and Anaheim 15.5%, according to wrenews.com. Those figures compare to the same month a year ago and use seasonally adjusted data, making them distinct from the national 4% month-over-month reading.

The next data points will show how much of the October rate spike — the weekly rate hit 7.40% on October 8, more than half a point above September's monthly average — has begun to show up in signed contracts. NAR's pending home sales index for September and Redfin's October contract data will be the first reads on whether the market is stabilizing or deteriorating further.

Why it matters — With contract cancellations at near-record levels and pending sales at a 12-year low, the pipeline of future home closings is thinning — meaning the full impact of 7.4% mortgage rates on the housing market is still ahead, not behind, us.

Sources differ on September 2026 existing-home sales direction: Closed sales rose 1.5% month over month to 3.99M annualized (alphapilot.tech (citing NAR)) vs Closed sales fell 1.6% month over month to lowest since late 2023 (wrenews.com (citing Redfin))

Reported by yahoo.com, finance.yahoo.com, wrenews.com, alphapilot.tech