Builders blame 7.3% mortgage rates for weaker orders as commercial property deals expand

US mortgage rates reached their highest level in nearly three years this month, and the housing data and company reports published since then describe the effect on buyers and builders in different words. The 30-year fixed rate averaged 7.32% in the week to October 22, according to Freddie Mac, after 7.40% in each of the two previous weeks, which the desk's computation of the weekly history shows to be the highest since the week of November 16, 2023. A year earlier the rate was 6.19%, so it is 1.13 percentage points higher (computed). This analysis follows that rate through sales, construction, the builders' reports, mortgage lenders and commercial property, and then turns to a Treasury proposal on investor purchases of single-family homes.

The rate

Freddie Mac's weekly survey of the 30-year mortgage rate was 6.65% in the week of August 20, 6.95% on September 17, 7.28% on October 1 and 7.40% on October 8 and 15. The 7.32% of October 22 was the first weekly decline since August. The 2026 low was 5.98% in the week of February 26, so the latest reading is 1.34 percentage points above it (computed). The survey averages rates offered from Thursday to Wednesday, and the next reading is due on October 29.

Sales of existing homes

The National Association of Realtors said existing-home sales rose 1.5% in September to a seasonally adjusted annual rate of 3.99 million, after 3.93 million in August. The September rate was 2.2% below the 4.08 million of September 2025 (computed), and sales were lower than a year earlier in all four regions. Inventory rose to 1.60 million homes, and prices were up 1.3% from a year earlier. NAR's chief economist, Lawrence Yun, said that August and September were the two slowest months of the year and that mortgage rate increases mean fewer buyers can qualify. The association's pending home sales index, which looks ahead to closings, decreased 7.3% in its latest reading.

Construction

The Census Bureau estimated housing starts at a seasonally adjusted annual rate of 1,221,000 in September, 5.2% below the revised August figure of 1,288,000. The agency also gave a confidence interval of plus or minus 11.8% for that change, which means that the data cannot establish whether starts actually rose or fell. Single-family starts were 859,000, 4.6% lower than August, and building permits were 1,400,000. The Census Bureau notes that it takes six months of data to establish a trend in starts, so one month's reading says little about direction.

Builders: orders and margins

Two homebuilders reported results that mention rates and affordability directly. NVR said new orders fell 7% to 4,391 units, the average price of new orders fell 5% to $442,100 and the cancellation rate rose to 21% from 19%. Its gross profit margin decreased to 18.3% from 21.0%, which it attributed to higher lot costs, pricing pressure due to affordability challenges and weak consumer sentiment, and about $24.8 million of impairments. Net income fell 27% to $248.6 million. Backlog nonetheless grew 10% in units to 10,121.

PulteGroup reported that net income fell to $476 million from $586 million, as home sale revenues fell 9% on 6,876 closings, also down 9%. Net new orders were 6,208, down 6%. The chief executive said demand was pressured by rising mortgage rates, widespread inflation and global unrest, and that the rapid increase in interest rates had stretched affordability further. In both cases the explanation is the company's own, and the data do not allow the desk to say how much of each decline is due to rates rather than other factors.

Mortgage lenders: purchase volume

UWM Holdings estimated third-quarter loan originations of $33.4 billion, of which $22.8 billion were purchase loans and $10.6 billion refinancings. It lowered its estimate of 2026 total revenue to about $3.35 billion to $3.50 billion, saying that the figure was lower than expected earlier in the year as a result of lower origination volume throughout the industry. Purchase loans were 68.3% of that volume (computed).

Commercial property: deals up, offices mixed

The picture in commercial real estate is less negative. CBRE reported that revenue rose 13% to $11.5 billion, helped by a 28% increase in global property sales revenue, including 37% in the United States where industrial and retail grew fastest. Global leasing revenue rose 6%, with US industrial leasing up 16% and office leasing down 2%.

SL Green, a Manhattan office landlord, raised its 2026 guidance for funds from operations to $6.50 to $6.70 a share from $5.60 to $5.90, mainly because of a gain from a joint-venture sale, partly offset by higher interest rates. Its same-store office occupancy was 95.0% at September 30, including leases signed but not yet started. It refinanced $2.0 billion on 245 Park Avenue at a fixed rate of 6.52%.

A proposed rule on large investors

On October 23 the Treasury Department published a proposed rule implementing a law, enacted on July 11, 2026, which prohibits purchases of single-family homes by large institutional investors, subject to exceptions. An investor is "large" if it has investment control of not less than 350 single-family homes. The civil penalty could be up to the greater of $1 million per violation or three times the purchase price of the property. The prohibitions take effect on January 7, 2027, and comments are due by November 23.

What the data show

The figures show higher mortgage rates alongside weaker new-home orders, smaller margins at some builders and softer existing-home sales than a year ago, while commercial property transactions are growing. Companies and the Realtors' economist link the housing weakness to rates and affordability; the government data on starts are too uncertain to confirm a trend. The sources do not show what will happen to rates, which depend on the Federal Reserve's decision on October 28 and on the Treasury market.