Pending home sales in August dropped for the first time in eight months against a backdrop of surging mortgage rates.
Stubbornly high mortgage rates finally took their toll on buyer demand in August, snapping an eight-month streak of pending sales growth even as sellers slashed prices.
The share of listings in pending status fell 0.2% from a year ago, marking the first negative readout since November 2025, according to the latest Realtor.com® monthly housing market trends report released on Wednesday.
A sale is listed as pending when a seller has accepted an offer from a buyer, but the deal has not yet closed. The pending home sales rate is a crucial indicator of the housing market's health because it helps predict the rate of finalized home sales a month or two later.
Pending sales have been losing steam since May, when the growth rate reached a selling-season peak of 4.8%. That coincided with a steady climb in mortgage rates driven by the ongoing conflict in the Middle East, which put upward pressure on oil prices and fueled inflation fears.
The average rate on 30-year fixed home loans hit its 2026 high of 6.69% on Aug. 6, according to Freddie Mac. Rates hovered in that range for the next three weeks amid bond market volatility, closing out the month at 6.66%—up more than 20 basis points from early July.
"It looks like August was the month where higher mortgage rates really caught up to housing demand," says Realtor.com senior economist Jake Krimmel, noting that rates crossed above their year-ago levels in early August.
Krimmel adds: "A year ago at this time, rates were declining, so that year-over-year comparison might just get uglier in the coming months."
Benjamin Cohen, managing director and senior vice president of mortgage lending at Rate, says retreating pending sales reflect the market's persistent affordability challenges.
"Buyers understand rates aren't going back to 3%, but when you combine today's rates with home prices, taxes, and insurance, the monthly payment can still be tough to justify," Cohen tells Realtor.com. "When rates moved higher again this summer, it caused some buyers to pause, while others believe the short-term affordability factor will improve when we find stability in the markets."
(Realtor.com) Regional divergence
Regionally, the Midwest suffered the most dramatic setback last month, with pending sales plunging 4.3% compared to 2025. The West followed with a 3.3% decline.
"We are seeing real evidence on multiple indicators of the Midwest slowing down," says Krimmel. He attributes this trend in part to higher interest rates in late summer starting to wear down on the traditionally affordable region.
In contrast, pending sales rose 1.8% year over year in the South and 1.1% in the Northeast.
Price cuts catch up to 2025 levels
Alongside pending sales, price cuts serve as another crucial gauge of market health. In August, 20.4% of active listings saw price reductions, catching up to last year’s level for the first time in 2026 after lagging all spring.
In the supply-constrained, in-demand Northeast and Midwest, price cuts were least common, appearing on 14.15% and 19.6% of listings, respectively. In the inventory-rich West and South, 22% and 21.4% of listings, respectively, were discounted.
"Both are signs of weakened buyer demand in the face of higher mortgage rates at the wrong time of the year," says Krimmel.
The role of seasonality
Pending home sales help predict the rate of finalized home sales in the near term. (Justin Sullivan/Getty Images) The economist stresses that there is room for some nuance when interpreting the monthly housing data, and that August's slowdown likely stems not only from economic headwinds but also from seasonal trends.
"It’s a time of year when activity typically winds down rather than ramps up," says Krimmel. "Plus, the U.S. just suffered through two of the hottest months on record—hardly ideal house-hunting weather."
Still, he concedes that six months of climbing mortgage rates have not helped matters.
"Regardless of whether it’s due to dog days of summer seasonality or real signal, housing activity is slowing for now," he concludes.
Nadia Evangelou, principal economist at the National Association of Realtors®, agrees that persistently elevated mortgage rates have had a chilling effect on summer demand.
"Mortgage rates are the biggest factor," she tells Realtor.com. "Even a modest decline in rates can help affordability and bring more buyers back, but also ease the lock-in effect for homeowners."
Fewer sellers are throwing in the towel
In good news for buyers, delistings were down nearly 13% compared to last year’s "Cruel Summer," suggesting that most sellers were sticking it out rather than retreating in frustration.
Overall, August housing data tells the story of a softening yet functioning market.
The national median asking price fell for the 10th consecutive month to $424,500, down 1.3% from last year.
Notably, prices have been falling slower than before, with August’s drop rate being half of July’s 2.4%.
Active listings edged up by 3.6% year over year, with all four regions gaining inventory for the first time in months. However, new listings were slightly in the red nationally and in most regions, with only the West registering a 1.5% gain.
Krimmel says falling pending sales and new listings are both signs that the "natural churn" that keeps the housing market moving has stalled.
However, Cohen makes the case that a less active market is not necessarily a negative thing.
"For buyers, a slower market can actually create opportunity," he says. "There is more time to make a decision, more negotiating power, and potentially more flexibility from sellers. If you find the right house and the payment works, I wouldn't sit on the sidelines waiting for the perfect market."
For sellers, Cohen stresses that pricing matters, and homes that are priced strategically still move quickly.
What needs to happen for fall market acceleration?
Going into September, Krimmel says it is important to keep an eye on the trajectory of delistings and their geography: Are more sellers withdrawing from the market, and where?
The other key bellwethers to monitor are price reductions and seller strategy. So far in 2026, sellers have cut less often and less deeply, with repeat discounts nearly halved from last July.
"All spring and summer, we praised sellers for pricing realistically and noted they were being rewarded for doing so with more homes going under contract than last year," says Krimmel.
But that dynamic is predicated on buyers continuing to show up.
"If that spigot turns off, with rates hovering close to 6.7% approaching the slow season, more sellers may resort to slashing prices or pulling their home," predicts the economist.
Krimmel says that for pending sales to accelerate this fall, mortgage rates will have to see a meaningful decrease, similar to what happened last year, when they shed roughly 20 basis points between early and mid-September and settled below 6.2% by Halloween.
"We are a long way off from that this fall," he says.
According to Evangelou, even incremental rate declines unlock significant purchasing power.
"A 1 percentage-point drop in rates can allow about 5.5 million more households to afford the median-priced home," the NAR economist says. "We also need more homes in the price ranges that buyers can afford. Inventory has improved, but the market still needs more affordable listings."
Meanwhile, Cohen argues that market stability could prove just as influential as lower borrowing costs.
"Buyers can plan around a 6.75% mortgage rate if they believe it's going to stay there," he says. "It's much harder when rates are moving week to week based on the latest headline. Give buyers a little more affordability and some certainty, and I think you'll see more of them get off the fence."