The Iran War continues to weigh heavily on the economy and the housing market, with mortgage rates returning to the 7% range as inflation remains elevated. With rates now peaked at nearly a three-year high, a new report from Redfin found that housing affordability is once again being eroded and home sales are paying the price.
Redfin’s latest data saw pending home sales bottom out to a 12-year low of 316,652 sales, only slightly above the pandemic (April 2020) volume of 299,829 sales. In addition, the report saw all 50 of the largest metros record declines in sales, something that has not occurred since rates were last around 7% in September 2023.
In conjunction with the fall in pending sales, Redfin also found that more buyers have been dropping out of deals as well. Specifically, 14.5% of sales were canceled in September, which is the highest rate seen since the start of the pandemic (March-April 2020).
Redfin’s report and methodology are separate from the National Association of Realtors®’ (NAR) analysis of pending sales, which found pendings down almost 5% year-over-year in August (data for September is scheduled to be released next week).
Chen Zhao, Redfin’s head of economic research, said that it’s “not surprising” that as rates are peaking home sales are dropping due to the lack of affordability, but there are still “silver linings” in the market for both buyers and sellers.
On the buying side, she noted that “less competition means more room to negotiate” on things such as price and seller concessions and that “slow sales also mean prices may flatten or fall in the not-so-distant future.”
Redfin did indeed report a slowdown in the growth rate of home prices, with the median asking price falling 0.5% month-over-month in September. This is in line with other recent industry reports showing a deceleration in home prices throughout 2026.
On the selling side, Zhao said home sellers should remember that “while many house hunters have pulled back, there are some people who need to move and are still buying homes.”
“My best advice for sellers in this environment is to price realistically from the start and lean into any flexibility you can offer; a rate buydown or covering closing costs can go a long way when buyers are stretched thin,” she concluded.
Sellers are definitely feeling a bit more resilient this year as pent-up demand is seeing some release, with Redfin observing the supply of homes for sale in September peak to its highest level since March 2020.
