The UK housing market is showing increasing signs of weakness beneath the surface, with new TwentyCi data revealing that the number of properties reaching sales agreed has fallen by more than 5% year-on-year for four consecutive months – a trend that is likely to weigh on residential transaction volumes during the final quarter of 2026.
TwentyCi’s latest Market Update shows that sales agreed volumes were down around 8% year-on-year in both May and June, followed by a 5% decline in July and a 6% decline in August. Overall, sales agreed volumes are down 5.4% year-on-year in the first eight months of 2026.
This contrasts with the latest completed transaction data, which shows a more resilient picture. HMRC recorded 5% year-on-year growth in residential transactions in July, although transactions remain 2.5% lower year-to-date compared with 2025.
The divergence highlights the importance of looking beyond completed transactions, which reflect activity agreed several months previously. TwentyCi’s sales agreed data provides a more timely indication of buyer demand and is now signalling a weaker pipeline of transactions heading into the final quarter.
TwentyCi is forecasting 1.16 million residential transactions for 2026, representing a 3.9% decline on the 1.21 million transactions recorded in 2025, although volumes will remain 5.6% higher than in 2024.
The latest data comes as renewed volatility in financial markets puts further pressure on mortgage pricing. Rising swap rates, driven by the global bond market sell-off, higher oil prices and renewed inflation concerns, have already prompted some lenders to increase fixed-rate mortgage pricing despite no change in Bank Rate.
With fixed mortgage rates more closely linked to swap rates than Bank Rate, the latest increase in wholesale funding costs could create a further affordability headwind for prospective buyers. This is particularly significant given that TwentyCi's data already points to a more cautious buyer environment, with mortgage affordability constraints and wider economic uncertainty contributing to the fall in sales agreed.
Colin Bradshaw, CEO at TwentyCi, said: “The housing market is presenting something of a mixed picture. On the surface, the latest transaction figures suggest that activity remains relatively resilient, but when we look at the more timely sales agreed data, a different story is emerging.
“Buyer demand has fallen by more than 5% year-on-year in every month since May, and that sustained weakness will inevitably feed through into completed transactions with a lag. For mortgage lenders, this is an important signal that the apparent resilience in headline transaction volumes should not be taken as an indication that the market is strengthening.
“The renewed rise in swap rates adds another layer of uncertainty. If fixed mortgage pricing continues to move upwards, it could put further pressure on affordability and make buyers even more cautious at a time when demand is already subdued. The direction of the market over the next few months will therefore be particularly important for lenders to watch.”
At the same time, the supply of homes coming onto the market continues to increase. TwentyCi data shows that the number of newly listed properties for sale is 2.1% higher year-on-year and is at its highest level in the last 10 years.
The combination of rising supply and falling demand is creating a more buyer-friendly market. TwentyCi’s demand-to-supply ratio has deteriorated across every major property type, with flats seeing the largest decline at 13.2% year-on-year.
For mortgage lenders, the changing balance between supply and demand, alongside renewed pressure on mortgage pricing, points to a market where borrower behaviour could become increasingly cautious as the year progresses.
