October Home Sales Slump as Pending Transactions Drop Nearly 17%

The U.S. housing market experienced another setback in October as higher mortgage rates and worsening affordability pushed more prospective buyers to the sidelines. New data from Zillow shows that newly pending home sales fell 16.8% year over year, marking the largest annual decline since August 2023 and the weakest October reading since 2018.

Completed existing-home sales also declined, falling 8.7% compared with October 2025. The numbers point to a housing market struggling to regain momentum, even as the supply of available homes gradually improves.

Higher Mortgage Costs Are Keeping Buyers Away

The biggest pressure point remains affordability. Mortgage rates averaged 7.33% in October, up from 6.86% in September, according to Freddie Mac data cited by Zillow.

That increase pushed the estimated monthly mortgage payment on a typical U.S. home to $2,004, assuming a 20% down payment and excluding property taxes and insurance. That's 12.8% higher than a year ago and 4.8% above September.

For a household earning the median U.S. income, the full cost of owning a typical home, including estimated taxes, insurance, and maintenance, now consumes approximately 41.5% of monthly income.

With borrowing costs rising faster than home values, many buyers are finding it difficult to justify making a purchase right now.

More Homes Are Available, but Sales Continue to Fall

Housing inventory is gradually improving, but that has not translated into stronger transaction activity.

Zillow estimates that approximately 1.4 million homes were available for sale nationwide in October, up 3.4% from a year earlier. However, new listings declined 4.2%, indicating that homeowners are also becoming more hesitant to enter the market.

Home values have largely stalled, increasing just 0.7% annually while falling 0.6% month over month. This suggests that sellers are facing a more challenging environment, particularly in markets where buyers have more properties to choose from.

What This Means Heading Into 2027

The October numbers suggest that the housing market could face another difficult stretch before conditions improve. Pending sales are an important leading indicator because they reflect homes going under contract before those transactions become completed sales. Their sharp decline raises concerns about sales activity heading into November and December.

For buyers, slower competition and growing inventory could create opportunities to negotiate better prices or request seller concessions. However, higher mortgage payments remain a significant obstacle.

For sellers, realistic pricing will become increasingly important. Homes that are priced too aggressively may struggle to attract offers as buyers become more selective.

The housing market does not necessarily need another major decline in home prices to remain difficult. As October's numbers show, high financing costs alone can keep buyers away, leaving both sales activity and market confidence under pressure.