Pending Home Sales Record Low | 2026 Buyer’s Market

Research by David Clark, The Shelhamer Real Estate Group.

Here’s the deal. Pending home sales just hit a record low. The lowest number since anyone started counting. Rates blew past 7% in a few weeks, builders are the gloomiest they’ve been in 14 years, and every region in the country went backwards.

If you’re a seller, that’s a rough headline. If you’re a buyer with a steady paycheck, some savings and a little nerve, it’s the best setup I’ve seen in years.

Real talk. Cheap money makes houses expensive. Expensive money makes houses cheaper. When rates are low, everybody shows up, bidding wars break out, and sellers name their price. When rates spike, the crowd goes home. Whoever is still standing gets the one thing buyers haven’t had since 2020: leverage.

That leverage rarely shows up as some giant price chop. It shows up as builder discounts, sellers paying your closing costs, repair credits, rate buydowns, and listings that sit long enough for the owner to stop dreaming. Stack those and a house that was out of reach during the low rate frenzy can land right back in your budget.

Here’s what happened, why it happened, what history says, and where the deals are right now. Plus the risks, because a deal is only a deal if you can carry it.

What the pending home sales record low actually means

The National Association of Realtors tracks signed contracts on existing homes with its Pending Home Sales Index. Contracts close a month or two after they’re signed, so this is the earliest honest read on where the market is heading.

In September that index dropped 7.3% to 66.0. Record low. Worse than 2008. Worse than the 2020 lockdowns. Down 11.3% from a year ago.

Wall Street did not see it coming. Economists surveyed by Reuters expected a dip of about 0.5%. The real drop was more than 14 times that.

Everything else in October backed it up. Redfin had pending sales down 12.7% year over year and falling in every metro it tracks, the first time that’s happened in three years. The National Association of Home Builders put builder confidence at a 14 year low, with buyer traffic the weakest since 2012 outside the start of the pandemic.

Pending sales lead closings. So expect ugly sales numbers for October and November too.

Why rates broke the market

Money. The average 30 year fixed started September near 6.71% and finished it at 7.40%. That’s 69 basis points in a few weeks.

The bond market did that. Investors started betting the Fed stays higher for longer, bonds sold off, long term yields jumped, and mortgage rates went right along for the ride.

Doesn’t sound like much? On a $400,000 loan, principal and interest goes from about $2,584 to about $2,770 a month. Nearly $190 more every month, more than $2,200 a year, for the exact same house.

NAR chief economist Lawrence Yun pinned the drop on rates climbing fast. Jobs are still growing. Wages are still rising. Financing costs just ran faster. Some buyers already in escrow stopped qualifying and had to walk. Others hit pause. The buyer pool shrank overnight.

Where it hit hardest

Every region fell. Not equally.

Region	Change from August	Change from a year ago
West	down 9.2%	down 15.0%
South	down 8.2%	down 12.0%
Midwest	down 6.5%	down 8.7%
Northeast	down 4.2%	down 9.4%

The West got hit hardest, and no surprise. California and Washington carry some of the biggest price tags in the country. Bigger loan, bigger payment swing. Expensive markets always feel a rate shock first.

The South is the sneaky one. It’s been the most reliable home sales engine in America for years, with jobs, people moving in and tons of new construction. But a lot of Sun Belt metros built like the party would never end, and that supply is now stacking up faster than local paychecks can absorb it. When inventory outruns buyers, sellers have to compete.

Cheap money, expensive homes: when to buy a home

Almost nobody pays cash. People shop by monthly payment, and the bank decides how big a loan that payment supports.

When rates are low, the same budget buys a lot more loan. In 2021, with rates under 3%, a buyer with $2,500 a month to spend could borrow way more than that same buyer can today. Multiply that by millions of households and you get a stampede. Buyers waiving inspections. Skipping appraisal protection. Throwing money over asking just to win.

When rates rise, the stampede runs in reverse. Same budget, smaller loan. Some buyers drop out. Some wait for rates to fall. The crowd thins and homes start to sit.

A house that sits costs its owner money every single month. Taxes, insurance, the mortgage. Builders sitting on unsold inventory pay interest on construction loans every month. Eventually the seller has to pick: keep waiting for a buyer who may never show, or make a deal with the one standing in front of them.

That’s the moment you want to be in. Redfin says sellers outnumbered buyers by a record 63% in September. In that market, the buyer with financing in hand writes the terms.

One more thing, and it’s the whole game. You can change your rate later by refinancing. You can never change the price you paid. Pay a bidding war price at a low rate and you’re stuck with that price forever. Negotiate a lower price at a higher rate and you keep the option to refinance when rates come down. Marry the house, date the rate. It’s an old line because it’s true.

What history shows

1979 to 1982: the original rate shock

The early 80s were the most expensive time to borrow in modern American history. The Fed went to war with double digit inflation, and the average 30 year mortgage hit 18.63% in October 1981. Read that again.

Sales and construction collapsed. National prices barely moved in dollar terms, but inflation was hiding the real story. Adjusted for inflation, the typical home lost about 5% from 1981 to 1982, and real prices went sideways for more than a decade. Rates fell to about 9% by 1986. The buyers who negotiated hard during the freeze and refinanced later did very, very well.

2006 to 2012: the credit crash

Deepest price drop on record, about 26% nationally from peak to bottom. Rates weren’t the villain that time. Bad lending, a flood of foreclosures and a financial meltdown were. The lesson still holds. When forced sellers outnumber buyers, prices can fall a long way, and buyers with good credit had their pick for years.

2022 to 2023: the pandemic hangover

This is the closest match to right now. Rates roughly doubled in 2022, from about 3% to over 6%, in under a year. Sales fell off a cliff and the national Case Shiller index slid about 4.4% from its peak. Locally it got real. Zillow had San Jose down 10.6% from the 2022 peak, Austin down 10.4% and San Francisco down 9.5%. Builders fought back with aggressive rate buydowns through their own lenders, and the buyers who grabbed them locked in well below the peak.

What these episodes have in common

Expensive money kills competition before it kills prices. Sales collapse fast. Prices move slow. That gap is where negotiating power lives. The hottest, priciest markets fall the furthest. And outside a credit crisis, national prices rarely crash. The discount shows up in local markets and in the deal terms. If you’re waiting for a 2008 fire sale, pack a lunch.

The buyer’s market in 2026 by the numbers

Builders are cutting prices and paying for incentives

New construction is where the deals are loudest. In its October survey, NAHB found 43% of builders cut prices, the highest share it has recorded since 2020. The average cut has held at 6% for seven straight months, and 65% of builders are throwing in incentives like rate buydowns and closing cost help.

The price data shows it. According to the U.S. Census Bureau, the median new home was $393,700 in August, down 5.8% from a year earlier and well off the $460,300 record from October 2022. New home supply sat at 8.5 months. That’s a lot of finished houses with nobody living in them, and builders hate paying interest on empty houses.

Seller concessions are at record levels

Resale is moving the same direction, just slower. Redfin says 22% of active listings cut their price in the four weeks ending October 11, the highest share in its records. The median asking price slipped 0.3% year over year, and homes now sit a median of 49 days.

Concessions are even bigger than price cuts. Sellers paid buyers concessions in 44.7% of U.S. sales in August and more than 45% in September, the highest for those months since at least 2020. Closing costs, repairs, rate buydowns. Atlanta led the big metros at 72.8%.

In a hot market you fight five offers and pay over asking. Today close to half of buyers are getting money back from the seller, more than one in five listings has already cut its price, and nearly half of builders are discounting. That’s not a seller’s market. That’s a sale.

How builder rate buydowns change what you can afford

This is where it gets fun. A rate buydown is the builder or seller paying cash upfront to drop your interest rate. Big builders are pushing effective rates into the low 6s and high 5s while the market sits above 7%.

Here’s what that does to your buying power at the same $2,770 a month in principal and interest:

Interest rate	Loan that $2,770 a month supports	Extra buying power vs. 7.40%
7.40% (market average)	About $400,000	None
6.50%	About $438,000	About $38,000
5.99%	About $462,000	About $62,000
5.50%	About $488,000	About $88,000

Buy the rate down from 7.40% to 5.99% and a $400,000 buyer becomes a $462,000 buyer. Same payment. Now stack the typical 6% builder price cut and a $490,000 house drops to about $460,600. The house you couldn’t touch six months ago just walked into your budget.

Know what you’re signing. A permanent buydown lowers the rate for the life of the loan. A temporary one, like a 2/1 buydown, lowers it for two years and then resets. Both have value. Only one changes your payment for good.

My buyer playbook

Get fully underwritten before you shop. Not a quick prequal. A real approval. In a thin market the buyer who can close on time gets the deal. Everybody else gets a polite no.
Start with new construction. Builders are under the most pressure and have the most tools. Ask every one of them what they’ll do on the rate, the closing costs and the upgrades. Get it in writing.
Compare incentives against an equal price cut. A $20,000 buydown and a $20,000 price cut are not the same money. The buydown drops your payment now. The price cut drops your loan balance, your property taxes and your cost if you refinance later. Have your lender run both side by side.
Hunt the stale listings. A recent price cut, or 45 days or more on market. Those are the sellers ready to talk.
Ask for concessions, not just a lower price. Close to half of sellers are paying them. Asking isn’t aggressive anymore. Not asking is leaving money on the table.

What this means in Los Angeles

The West took the steepest hit, and LA is softening, even if it’s still tighter than the national market. Across LA County, the median sale price for all home types was about $913,000 in September, roughly flat from a year ago, and homes sold for 99.2% of list on average. But sales fell 7.8% year over year, the median home took 52 days to sell, and 18.1% of listings cut their price.

At LA prices the rate move hits harder. On a $720,000 loan, which is a $900,000 home with 20% down, September’s rate jump added about $335 a month. A buydown from 7.40% to 5.99% knocks about $670 a month off that payment.

Where I’d look: listings that blew past the 52 day median, condos, and new construction on the edges of the county where builders are hungrier. And remember that countywide numbers are averages, and averages hide things. Two neighborhoods a few miles apart can be in completely different markets. For LA prices, payments and loan programs, read my companion piece, Los Angeles housing market 2026: how buyers can still win.

Risks to weigh

Rates may not come down. Plenty of buyers are banking on a refi in a year or two. Maybe. In the 80s, rates stayed in double digits for years after the peak. Buy a payment you can carry at today’s rate. Period.

Temporary buydowns expire. On a 2/1, the payment steps up in year two and again in year three. Budget for the full payment from day one.

Prices could keep sliding. Nobody rings a bell at the bottom. In overbuilt markets prices could slip more. If you’re staying for years, that matters a lot less.

Watch for padded base prices. Some builders fund the incentive by raising the list price. Compare the net cost against real resale comps nearby.

The economy could cool. The same tight money that creates discounts can slow hiring. Make sure your income is solid and keep a cushion after closing.

Rate locks keep supply tight. Millions of owners are sitting on mortgages under 4% and aren’t going anywhere. That keeps inventory thin and prices sticky. Don’t expect a crash. Expect a negotiation.

The bottom line

The pending home sales record low is bad news for the market as a whole. It’s good news for the right buyer. The same rate shock that sent everybody to the sidelines handed the people still in the game real negotiating power. Nearly half of builders are cutting. Close to half of sellers are paying concessions. Buydowns can add tens of thousands in buying power for the same payment.

Cheap money made homes expensive. Expensive money is making them cheaper, one concession at a time. Hesitation is the most expensive hobby in LA.

Buying in Los Angeles? My Los Angeles neighborhood guides have the current numbers by area, and my buyer page shows exactly how we negotiate for buyers.

This article is for general information and is not financial or legal advice. Talk with a licensed lender before making a purchase decision. Payment figures are principal and interest only on a 30 year fixed loan.

Pending Home Sales Record Low: A Buyer’s Market in 2026