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 thesehold 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. "Still, home prices are rising, and existing home sales are actually up 1.6% year-to-date through the first eight months of the year."
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.
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.
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. of unsold inventory, up from 4.6 months in July and 4.6 months in August 2025.
"The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate," says Yun.
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