"There continues to be a dearth of available listings in the lower end of the market for first-time buyers, and Realtors in many areas are reporting stronger competition than what's normal this time of year because of stubbornly-low inventory conditions," Realtors' chief economist Lawrence Yun said in a statement. "Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach."
Sales dropped across the nation, with the weakest reading in the Northeast. Sales there fell 4.0 percent in September from August. In the Midwest, pending home sales declined 2.5 percent and were 2.6 percent lower in the South. The West was nearly flat, with sales down just 0.2.
The read on contracts caps off some mixed September housing data. Closed sales of existing homes rose more than expected while contracts to buy newly built homes dropped dramatically. Housing starts were strong, but mostly led by multifamily construction. Home prices are also still rising far faster than income growth.
Real estate brokerage Redfin reported flat demand in September compared to a year ago, the weakest read of 2015.