Existing Home Sales Hit 14-Month Low as Mortgage Rates Climb Near 7%

U.S. existing-home sales dropped to a 3.98 million annual pace in August, marking the weakest performance in 14 months, according to data released Thursday by the National Association of Realtors (NAR). While the lack of buyer demand suppressed transactions, it simultaneously pushed the supply of homes for sale to nearly a seven-year high.

Single-family home sales also reached their lowest point since June 2025. Lawrence Yun, NAR’s chief economist, noted the inverse relationship between borrowing costs and purchasing activity. “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.

The housing sector has faced a prolonged downturn fueled by persistently high prices, historically tight inventory, and elevated mortgage rates. These conditions have deterred both first-time buyers and repeat purchasers, while homeowners holding ultra-low rates remain reluctant to re-enter the market.

Recent inflationary pressures, partly triggered by rising oil prices, have weighed on the bond market and driven up the 30-year mortgage rate. The average rate hit 6.97% in September, per Mortgage News Daily, raising concerns about further sales declines. With a Federal Reserve rate hike expected at next week’s meeting, Danielle Hale, chief economist at Realtor.com, warned that higher rates will likely continue to pressure home sales in the near term.

Despite the sluggish sales, August data revealed a silver lining for consumers. Total housing inventory rose approximately 6% from a year earlier to 1.62 million units, the first time since November 2019 that stock exceeded 1.6 million. Yun described the market as shifting from a seller-favorable environment toward one where buyers can negotiate more effectively.

The median sale price for an existing home reached $429,100 in August, up 1.6% from the previous year and setting an all-time high for the month. Meanwhile, listings surged in key metropolitan areas. San Jose saw a 25.5% increase, Nashville rose 15.8%, and Seattle climbed 13.7%, according to Redfin.

As sales slow, buyers are gaining leverage. Redfin reported that roughly 60% of homes nationally sold below their original asking price in August. The trend was even more pronounced in Florida and Texas, where 85% of homes in West Palm Beach and 82% in Austin sold for less than the initial listing price.

“More listings mean buyers can take their time, compare homes and negotiate instead of feeling pressured to jump on the first decent property they see,” said Chen Zhao, head of economics research at Redfin. “In many parts of the country, buyers may be able to negotiate on price, repairs or closing costs — and walk away if the numbers don’t work.”

While affordability remains a challenge for many, Zhao noted that the current conditions offer a much friendlier landscape for those who can afford to buy compared to recent years.