Pending Sales Hit a Record Low While Closings Rose. My Take

Two reports landed on the same day this week, and they look like they disagree. The National Association of Realtors says pending home sales fell 7.3% in September, dragging its index down to 66.0 - the lowest reading since the series started back in 2001. Signed contracts are now 11.3% below where they were a year ago. And in the same breath, the same data set shows completed existing-home sales actually rose 1.5% from August. Fewer deals signed, more deals closed. Both things are true, and the gap between them tells you exactly what's happening to buyers right now.

What happened is simple: rates spiked while the ink was drying. The average 30-year fixed mortgage climbed from about 6.8% at the start of September to 7.6% by the end, according to Mortgage News Daily. A buyer who started house hunting in early September was doing the math on a very different payment by the time they had to actually sign. Lawrence Yun, the NAR's chief economist, put it bluntly: market conditions weakened because mortgage rates rose fast. The Mortgage Bankers Association's numbers back him up - purchase applications fell 7% in a single week and sit 18% below last year, with rates at a two-year high of 7.41%.

So here's the split. The closings that rose in September were deals signed back when money was cheaper - that pipeline is now emptying out. The contracts that collapsed were signed under 7%+ money, and they're the ones that will (or won't) close in October and November. Yun offered one note of hope: because mortgage rates have risen so much further than the Fed's own short-term moves, rates could be topping out. Maybe. But "could" doesn't sign contracts, and right now the forward picture is thinner than the rear-view one.

What I'd do if I were listing this week

First, price for the payment, not for spring. Buyers aren't comparing your price to March comps - they're comparing a monthly number to their budget, and at 7.4% that number is brutal. Run the maths on our mortgage calculator so you know the figure your buyer is staring at before you ever talk price. A house that pencilled at your asking price in June needs fresh numbers now.

Second, spend a little of your commission money on the buyer's side. You kept roughly 6% that a listed seller hands to agents - $24,000 on a $400,000 home. Using a few thousand of it to buy down the buyer's rate the way the builders do can move your home while the listed house down the street sits. You're still walking away with more.

Third, sort the serious from the browsing. Purchase applications down 18% year-on-year means the casual lookers have mostly left the building. The buyers still touring homes have a reason to buy. Ask every enquiry two questions: are you pre-approved, and what's your timeline? Then give your time to the ones who can answer both.

The market isn't frozen - deals are still closing. But the buyers are fewer, they're doing payment maths on their phones, and they're signing a lot less. Meet them where they are and you sell; price for the market you wish you had and you sit.

Sources: NAR September pending home sales data, via TokenPost; MBA mortgage application survey, via The Mortgage Note.