Concerns about the U.S. economy, including creeping unemployment and minimal new job creation, may have contributed to a zero increase in contracts to buy existing houses in September.
The monthly report on contracts from the National Association of Realtors also shows that these transactions declined 0.9% from the same month in 2024. Contracts often precede actual sales by one to two months. They were flat last month despite several weeks of falling mortgage rates, with the average for a fixed-rate, 30-year loan falling to 6.19% last week.
“A record-high stock market and growing housing wealth in September were not enough to offset a likely softening job market,” said Lawrence Yun, the NAR’s chief economist, in a statement Wednesday.
The word “likely” is because the U.S. Bureau of Labor Statistics did not publish a jobs report for September due to the federal government shutdown. However, at least two private-sector analyses released earlier this month indicated that companies aren’t hiring much and may be shedding jobs.
On a regional basis, the Northeast and South were the bright spots in September for house contracts, with 3.1% and 1.1% increases, respectively. Both also saw more transactions compared to the previous year, increasing by 0.5% and 0.9%.
On the other hand, the Midwest and West were down 3.4% and 0.2% from August, and 1.5% and 5.3% from September 2024.
Despite the lack of official jobs data for September or more recent weeks, the Federal Reserve was widely expected to cut a key interest rate on Wednesday. While inflation has been rising somewhat in recent months, partly due to the government’s tariffs on imported goods, the Fed is more concerned now about a shaky job market. Cutting the rate could encourage businesses to bolster hiring.
“Prospective homebuyers are still cautious as they face uncertain economic conditions,” Lisa Stutevant, chief economist for the mid-Atlantic-based Bright MLS, said last week in a statement. “The push and pull of lower rates and rising economic uncertainty means that home sales activity is likely to remain steady through the fourth quarter, with total 2025 transactions ending only slightly above last year.”
Mortgage rates are heading toward 6%, a level Yun said over the summer would prompt numerous homebuyers to go ahead with purchases they may have been hesitant about. The supply of houses for sale also continues to grow across the country, another positive sign.
“Looking ahead, mortgage rates are trending toward three-year lows, which should further improve affordability, though the government shutdown could temporarily slow home sales activity,” Yun said.