U.S. Housing Market Faces Setback Amid Rising Mortgage Rates

The U.S. housing market saw significant challenges in September, with rising mortgage rates causing hesitation among potential buyers. This situation poses additional concerns regarding affordability, which is a critical issue for President Donald Trump and Republicans as the midterm elections approach.

Mortgage Rate Impact on Home Sales

Pending home sales, indicating signed contracts for existing homes, dropped by 7.3% from August and 11.3% compared to the previous year. This decline aligned with mortgage rates increasing from around 6.8% to 7.6% during September, based on data from the National Association of Realtors and Mortgage News Daily.

Kevin Thompson, CEO of 9i Capital Group, commented, “Higher rates will definitely slow the housing market, and force those with much lower rates to stay put. The housing market will be at a standstill for some time to come.”

Why Affordability Concerns Matter

Affordability is a key issue in the upcoming November 3 midterm elections, primarily affecting younger voters. The overall economy is a significant factor for registered voters. Rising mortgage rates quickly alter a household’s buying power, even if home prices remain unchanged.

The median price for existing homes hit $417,500 in September, marking a 1.3% increase from a year earlier, reaching the highest September price on record according to data.

Election Year Dynamics

During his 2024 campaign, Trump promised to reduce household expenses, proposing mortgage rates as low as 2%. However, rates have moved upward instead. The average 30-year mortgage rate recorded by Freddie Mac rose to 7.40% by early October, the peak since November 2023.

Thompson noted, “Affordability is the name of the game, and if it continues to get worse you will see an even heavier decline in regard to approval ratings for the president and those who push his agenda.”

Meanwhile, homebuilder sentiment has fallen. The NAHB’s October reading was the lowest in 14 years, driven by current sales, expected sales, and declining buyer traffic.

Potential Economic Outcomes

Completed existing-home sales rose 1.5% in September to an annual rate of 3.99 million, though still down 2.2% from the previous year. This period marks the slowest sales rates for 2026. Housing inventory increased by 1.9%, hitting 1.60 million homes, the highest since November 2019.

Economist Alex Beene observed that supply-side constraints and affordability issues hinder the market, with borrowing interest rates reaching highs unseen in nearly two decades.

Realtor.com data showed 20.8% of listings had price reductions in September, the highest since October 2022. Active listings rose 5.5% compared to September 2025, indicating some bargaining power for buyers amidst affordability challenges.

Housing Affordability and Midterm Elections

The upcoming midterm elections on November 3 have placed housing affordability at the forefront for many voters. A survey by Pew Research Center shows 84% of registered voters regard the economy as critical to their voting decision. Housing costs are especially vital for younger voters, with a significant portion addressing these concerns.

Understanding Mortgage Rate Fluctuations

Mortgage rates are not directly dictated by the Federal Reserve’s benchmark rate. Instead, they are influenced by long-term borrowing costs in the bond market, geopolitical issues, and shifting monetary policies.

Reuters reported that the average 30-year rate hit 7.40% as of early October amid ongoing inflation, with the Consumer Price Index increasing by 3.7% year-over-year in September.

Looking Ahead

Experts anticipate the housing market may weaken further due to incomplete data reflecting October’s higher rates. Without a decline in mortgage rates or a significant fall in home prices, monthly payments remain unaffordable for many potential buyers. Timing is crucial for Trump and congressional Republicans as election day approaches.