In August, sales of previously owned homes fell 2% from July to an annualized rate of 3.98 million units, marking the slowest pace since June 2025, according to the National Association of Realtors (NAR). This decline, which also represents a 1.2% year-over-year drop, is attributed to higher mortgage rates that surged in mid-July.
Lawrence Yun, chief economist for the Realtors, noted that the inverse relationship between mortgage rates and home sales is evident, as high rates dampen buying activity. Despite the slowdown in sales, home prices continue to rise, with the median price reaching a record high of $429,100 in August, up 1.6% from the previous year.
The increase in housing supply, which totaled 1.62 million homes for sale—up 3.2% from July and 5.9% year-over-year—has not translated into lower prices, particularly in the Northeast where inventory is tight. The market is seeing a shift in buyer demographics, with first-time buyers making up 30% of sales, while investor participation has decreased significantly.
Homes are also taking longer to sell, averaging 31 days on the market. The luxury segment remains robust, with sales of homes priced above $1 million increasing by 3.9%, contrasting with a 10% decline in sales for homes priced between $100,000 and $250,000.
This mixed picture suggests that while supply is increasing, affordability issues driven by high mortgage rates and rising prices continue to challenge the broader housing market