Why pending home sales just fell to their lowest level on record

Homebuyers signed fewer purchase contracts in September than at any point on record, according to MarketWatch, after the average rate on a 30-year mortgage crossed above 7%.

Pending home sales track signed contracts to buy homes, not completed sales. That makes the figure an early look at whether buyers are willing and able to proceed before the keys, moving trucks and final stack of paperwork arrive.

Why it matters: A mortgage rate above 7% can change the math quickly for a buyer. Higher borrowing costs mean a larger monthly payment for the same house, or a smaller house for the same payment. MarketWatch reported that buyers pulled back from the housing market as rates rose.

The number that matters: MarketWatch called September's reading the lowest level on record, a 25-year low at minimum. Contract signings reached a level that shows how little room the market has left for buyers facing today's financing costs.

The catch: Pending sales are contracts, so they do not tell us how many purchases will ultimately close. They do show that fewer people got far enough to sign one in September, which is the problem before the closing problem.

The question for the next pending-home-sales report is whether buyers come back if mortgage rates ease.