Existing Home Sales Decline in August as Inventory Reaches Decade High

Existing home sales in the United States dropped in August, marking the slowest pace since June 2025, even as the housing market saw its largest inventory increase in more than ten years. According to data released Wednesday by the National Association of Realtors (NAR), sales of previously owned homes decreased by 2% from July to an annualized rate of 3.98 million units.

The slowdown was most pronounced in the Northeast and Midwest regions. On a year-over-year basis, sales activity declined by 1.2%. Because the metrics are based on closed transactions, the figures likely reflect contract signings from June and July, periods when mortgage rates had climbed sharply compared to the spring.

Lawrence Yun, the NAR chief economist, noted that the relationship between borrowing costs and purchasing activity typically moves in opposite directions. “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,” Yun said. He added, however, that overall sales activity remains positive year-to-date, up 1.6% through the first eight months of the year.

Despite the drop in transaction volume, the supply of homes for sale expanded significantly. Inventory totaled 1.62 million units at the end of August, representing a 3.2% increase from July and a 5.9% rise compared to the same period last year. This volume translates to a 4.9-month supply at the current sales pace, which NAR identified as the highest level in over a decade.

Home prices continued their upward trajectory, defying the typical expectation that increased supply would cool costs. The median sales price for an existing home in August reached $429,100, a 1.6% increase from August 2025 and a new record high for the month. Price growth was strongest in the Northeast, where inventory constraints are most acute, while the West was the only region to experience a year-over-year median price decline.

Sales performance varied significantly across price brackets. Transactions for homes priced between $100,000 and $250,000 fell by 10% compared to August 2025. In contrast, sales of luxury properties priced above $1 million rose by 3.9%, making that segment the only price range to see increased activity.

Other market indicators showed mixed trends. The average time for a home to remain on the market increased to 31 days in August, up from 29 days in July. Cash buyers accounted for 27% of transactions, slightly higher than the previous month but down from the prior year. First-time buyers represented 30% of sales, a slight improvement from both July and August 2025. However, investor and second-homebuyer participation dropped to 15% of sales, down from 21% a year earlier.