Mortgage Dip Sparks a Pickup in Homebuyer Activity as Pending Sales Rise in October

Lower borrowing costs appear to be nudging more buyers back into the housing market. Contracts to purchase existing U.S. homes climbed in October, posting a stronger-than-expected gain as shoppers took advantage of mortgage rates that had been drifting downward.

The National Association of Realtors reported that pending home sales increased 1.9% last month, following a small, upwardly revised 0.1% rise in September. Economists had anticipated a much smaller move—forecasting growth of about 0.5%—which suggests demand responded more quickly than many analysts expected.

Even with the month-to-month improvement, the market hasn't fully regained its footing. Pending sales were still 0.4% lower than a year earlier, underscoring that affordability pressures remain a major hurdle for many would-be buyers.

A seasonal shift gives buyers more leverage

NAR's chief economist Lawrence Yun noted that the months ahead may bring a different dynamic for shoppers. As the calendar moves into late fall and winter, homes often sit longer, especially between November and February, a stretch when sellers may be more willing to negotiate because fewer buyers are actively hunting.

Regional results were mixed

October's increase wasn't evenly distributed across the country. Contracts rose in the Northeast, Midwest, and the South, while the West moved in the opposite direction, showing a decline. That regional split reflects how strongly local affordability, inventory, and price levels can shape buyer behavior—even when national mortgage rates move the same direction.

Rates helped—though the path forward is less clear

Mortgage rates had been easing after the Federal Reserve resumed interest rate cuts, according to Freddie Mac data. But that downward momentum has slowed as some Fed officials have suggested they may be cautious about cutting again in December. Still, New York Fed President John Williams recently indicated that rates could decline again "in the near term," leaving the market in a watch-and-wait posture.

For buyers, the takeaway is simple: even small rate improvements can spark activity, especially when inventory and timing create negotiation opportunities. For the broader housing market, October's numbers point to cautious optimism—demand is still there, but it's highly sensitive to the direction of mortgage rates.

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