According to Redfin News, pending home sales across the country have dropped to levels we haven't seen since spring 2014, aside from when the pandemic froze the market in April 2020. What's driving this decline is a significant jump in mortgage rates that pushed past 7% as we moved through September, making it much harder for everyday people to afford homes. The month-to-month drop was actually the steepest we've seen in over three years, signaling real weakness in buyer activity.
The West Coast has been hit particularly hard by this slowdown. Markets like Seattle, Los Angeles, San Diego, and the Orange County area all experienced double-digit drops in pending sales compared to last year. These are expensive places to begin with, so when borrowing costs spike, it prices out a lot of people who were on the fence about buying. Seattle's situation is compounded by some weakness in the local job market on top of the rate pressures.
One interesting shift happening right now is that every single one of the fifty largest metro areas in the country saw pending sales decline simultaneously, which Redfin Notes is something we haven't witnessed in three years. The inventory situation is also starting to loosen up a bit, with total homes for sale reaching its highest point since March 2020. However, new listings aren't surging dramatically, which tells us that most sellers aren't rushing to put homes on the market despite the softer conditions.
We're also seeing unprecedented numbers of buyers backing out of deals after going under contract. According to the reporting, nearly one in seven purchase agreements nationwide fell through in September, the highest rate since the pandemic began and the strongest buyer's market on record. This reflects how much power has shifted to buyers when competition thins out. When there are more homes to choose from, buyers feel comfortable walking away if something doesn't sit right, whether it's an inspection issue or concerns about their actual monthly payment.
What I am seeing locally here in the Bay Area and the East Bay is that we're operating in two very different markets. San Francisco and San Jose are among the few places holding onto seller's market conditions, with contract cancellation rates far below the national average, while most other regions around the country are giving buyers real leverage. For sellers in our area who aren't in those strong metros, this is a wake up call to price thoughtfully from day one and be willing to sweeten the deal with things like rate buydowns or closing cost assistance if you want to attract serious buyers.
