Housing Market Hits Lowest Activity Since 2020 as Mortgage Rates Stay Near 7 Percent

Housing starts fell to some of the lowest levels since 2020 in October 2026, with pending home sales dropping more than 7 percent month-over-month as elevated mortgage rates and rising costs kept buyers on the sidelines.

The Federal Reserve raised its target rate to a range of 3.75 to 4 percent in late September, pushing the 10-year Treasury yield to 5.11 percent and keeping mortgage rates near 7 percent. At those levels, monthly payments on a median-priced home have become unaffordable for many first-time buyers.

Home insurance costs are adding to the pressure. The average home insurance premium now exceeds property tax bills in two-thirds of U.S. counties, according to recent data. In some high-risk states, premiums have risen 30 to 40 percent over the past two years.

Pending home sales, which measure signed contracts on existing homes, fell more than 7 percent from September to October. That figure tracks closely with mortgage application volume, which has also declined sharply.

Builders have pulled back on new construction in response to weak demand. Housing starts, which measure the number of new homes where construction has begun, hit levels not seen since the early months of the pandemic.

Economists said the market is unlikely to recover significantly until mortgage rates fall below 6 percent, which most forecasters do not expect before mid-2027 at the earliest. Some analysts said the combination of high rates and high insurance costs could keep the market frozen well into next year.