Pending home sales fall as markets anticipate further Federal Reserve interest rate hikes

Pending home sales dropped to their lowest level in more than 20 years on Tuesday, falling 7.3 percent from August and 11.3 percent year over year, MPA Magazine reported. The decline followed a rapid September increase in the 10-year Treasury yield, which peaked in early October and brought sustained pressure on the mortgage market. The Federal Reserve is scheduled to hold its penultimate policy meeting of 2026 next week, following a previous rate increase in September. [1]

Market speculation indicates the September interest rate hike may not be the central bank's last of the year, according to MPA Magazine and Mortgage Professional America. A rise in the 2-year Treasury yield suggests that more rate hikes could occur, though industry observers note this does not automatically result in higher long term mortgage borrowing rates. [1][2]

Federal Reserve Governor Christopher Waller previously indicated that additional interest rate hikes would be necessary to return inflation to the central bank's official 2 percent target, as FTMQ Real Estate reported earlier. Governor Waller delivered his remarks on monetary policy at the Central Bank of Turkiye Istanbul Economic Forum. [5]

The upcoming central bank meeting will clarify the future path of monetary tightening as real estate professionals track how secondary market yields affect primary mortgage pricing. [1]