Home Sales Plunge to 14-Month Low as Rising Mortgage Rates Stun Buyers

Home selling suffered a setback in August, both on a monthly and annual basis, as surging mortgage rates kept more would-be buyers on the sidelines at the end of summer.

Existing-home sales decreased to a seasonally adjusted annual rate of 3.98 million, down 2% from July and 1.2% from a year ago, the National Association of Realtors® reported Thursday. The last time sales dipped below the 4 million threshold was in June 2025.

Falling behind the year-ago pace, the August sales snapped a four-month streak of annual gains.

"Mortgage rates and home sales move in opposite directions, so it's not surprising to see a mild dip in home buying activity due to high mortgage rates," says NAR Chief Economist Lawrence Yun.

The 30-year fixed-rate mortgage climbed to 6.71% on Sept. 3, its highest level in more than a year, according to Freddie Mac, as renewed inflation fears triggered a large-scale bond sell-off.

"With a rate hike in play at next week’s Fed meeting, higher mortgage rates are likely in the near-term, which will keep homebuying costs high, but the expectation of higher financing costs on the horizon could encourage buyers to move ahead rather than wait, creating mixed pressures for buyers this fall," says Realtor.com® chief economist Danielle Hale.

At the same time, existing home sales are actually up 1.6% year to date through the first eight months of the year.  

"That is showing some stability in home sales ... but also the fact that the resiliency of homebuyers is still not falling apart," says Yun on a call with reporters.

At the regional level, month-over-month sales held steady in the West but slumped in the Northeast, Midwest and South. Meanwhile, annual sales declined everywhere except the South, where they remained flat.

Yun points out that despite the persistently high borrowing costs cooling sales, homebuying demand is being propped up by rising wages, which increased 3.2% in August, according to the latest better-than-expected jobs report.

"Job creation and wage growth typically drive housing demand," points out the economist.

Even as sales contracted, the median sales price continued rising, edging up 1.6% year over year to $429,100, a record high for the month of August. This marks the 38th consecutive month of annual price gains.

Reflecting regional variation, the Northeast led the nation in annual price gain, which surged 4.3%, to $556,900. The Midwest saw the second-biggest growth of 3.3% from August 2025, to $340,400.

In the well-supplied South, prices ticked up 0.7% year over year, reaching $366,500, while the West experienced an annual downturn of 0.2%, coming in at $619,100.

Single-family home sales fell 1.9% from July to a seasonally adjusted rate of 3.62 million properties, down 1.1% compared to a year ago. Meanwhile, condominium and co-op sales dropped 2.7% both month over month and year over year to 360,000 units.

Growing inventory

Looking at the national housing supply, total inventory in August hit 1.62 million units, up 3.2% from July and up 5.9% from year-ago levels. This is the first time since November 2019 that inventory exceeded 1.6 million units.

At the same time, the number of months it would take to exhaust the nation's unsold inventory reached 4.9 months' supply, the highest level in over a decade.

"The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate," says Yun.

According to Hale, that means homebuyers saw the best market-balance conditions on average nationwide in more than a decade.

In more good news, housing affordability improved in every part of the U.S., with the West leading the pack (5.9%), followed by the south (4.5%), the Midwest (1.7%), and the Northeast (0.5%).

Mixed indicators

Realtor.com data shows that new listings remained sluggish in both July and August, not topping their prior year pace as was common in the spring, but active listings continued to climb. 

"Home sellers have largely sidestepped disappointment this summer and are sticking with the market rather than delisting, a marked contrast to 2025, but relatively flat new listings signal caution among potential sellers," notes Hale. "This caution will likely keep slowing home sales from tipping the market abruptly in favor of buyers."

On top of that, the share of first-time home buyers rose to 30%, up from both the prior month and prior year.

"As mortgage rates climb, the lock-in for existing homeowners with low outstanding mortgage rates grows," says Hale. "A stronger lock-in may mean we see an increased share of first-time homebuyers in the months ahead, which also tend to rank among the friendliest for homebuyers seasonally."