Signed contracts to buy existing homes in September jumped a surprising 7.4% compared with August, according to the National Association of Realtors. Analysts had been expecting about a 1% gain.

These so-called pending sales were at the highest level since March and 2.6% higher than September of last year.

Since pending sales are based on signed contracts, representing people out shopping during the month, it is the most current indicator of buyer demand. It also shows just how sensitive today’s buyers are to mortgage rates.

The average rate on the 30-year fixed mortgage was coming down all through August and touched its most recent low of 6.11% on Sept. 11, according to Mortgage News Daily. It stayed around that level for the rest of the month before shooting higher in October. It is now just over 7%.

“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said Lawrence Yun, chief economist for the Realtors, in a release. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”

Regionally pending sales were higher year over year in the Northeast and West and flat in the Midwest and South. Overall, the gains were biggest in the West, where home prices are the highest and buyers would benefit most from even a small drop in rates.

With rates now higher, affordability is taking a hit once again. Mortgage demand from homebuyers, however, still saw gains last week and was 10% higher compared with the same week one year ago, according to the Mortgage Bankers Association. The levels of mortgage demand are still historically low, and sales, while higher, are as well.

“With rates pushing back to 7%, the rebound in pending activity is likely short lived and is unlikely to be enough to help 2024 home sales exceed 2023 levels,” said Selma Hepp, chief economist at CoreLogic.