More homes are available, properties are taking longer to sell, and fewer investors are competing for them. None of that has been enough to revive the purchase market.
Existing-home sales fell 2% from July and 1.2% from a year earlier in August to a seasonally adjusted annual rate of 3.98 million, according to the National Association of Realtors.
It was the third consecutive monthly decline and the slowest sales pace since June 2025. Existing-home sales have remained near historically weak levels since 2023.
The slowdown came despite a meaningful improvement in supply. The number of homes available for sale increased 3.2% from July and 5.9% from a year earlier to 1.62 million, the highest total since November 2019.
At the August sales pace, the market had 4.9 months of supply, up from 4.6 months in July and August 2025. It was the highest level in more than a decade and within the four-to-six-month range generally considered a balanced market.
“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,” said Lawrence Yun, NAR’s chief economist.
Rates Have Moved Higher Since August
The average 30-year fixed mortgage rate was 6.67% in August, up from 6.54% in July and 6.59% a year earlier, according to Freddie Mac data cited by NAR.
August closings largely resulted from contracts signed in June and July, meaning the report does not fully capture the subsequent deterioration in borrowing conditions.
Freddie Mac’s weekly average rose to 6.76% as of Sept. 10, up from 6.71% a week earlier and 6.35% a year earlier. It was the highest average 30-year fixed mortgage rate since June 2025.
Mortgage application volume was already responding to higher borrowing costs. Total applications declined 2.7% during the week ended Sept. 4, while refinance applications fell 6.2%, according to the Mortgage Bankers Association. MBA’s average contract rate increased to 6.85%, its highest level in more than 14 months.
More Supply, Little Payment Relief
Growing inventory has not produced a meaningful reduction in home prices.
The median existing-home price increased 1.6% from a year earlier to $429,100, marking the 38th consecutive month of annual price growth. Meanwhile, the average 30-year fixed mortgage rate rose to 6.67% in August from 6.59% a year earlier, leaving buyers facing higher prices and higher borrowing costs.
NAR’s broader Housing Affordability Index nevertheless improved to 104.7 from 101.2 a year earlier, with gains recorded in all four regions.
Builders Can Compete On The Payment
Ali Wolf, chief economist at NewHomeSource and Zonda, said the sales decline was not surprising after pending-home sales in July reached their weakest level of the year.
“The decline in existing home sales isn’t all that surprising, given pending home sales in July were the weakest all year,” Wolf said.
She pointed to high borrowing costs, labor-market uncertainty, high consumer prices, concerns about AI, and conflict in the Middle East as reasons consumers are more comfortable remaining on the sidelines.
New construction continues to have an advantage over the resale market, Wolf said, because builders can adjust prices, offer mortgage-rate buydowns, and change home specifications. She said that flexibility has made new construction a more affordable alternative to resale homes over the past five months.
Individual sellers generally cannot match a builder’s full incentive package. But rising resale inventory and longer marketing times give originators more reason to discuss seller concessions, closing-cost assistance, and temporary rate buydowns early in the transaction.
Financed Buyers Gain Some Ground
Mortgage-dependent buyers faced slightly less competition than they did a year earlier.
First-time buyers accounted for 30% of August transactions, up from 29% in July and 28% a year earlier. Cash purchasers represented 27% of sales, up from 26% in July but down from 28% in August 2025.
Individual investors and second-home buyers accounted for 15% of purchases, down from 21% a year earlier.
Properties remained on the market for a median of 31 days, two days longer than in July but unchanged from August 2025. Distressed transactions remained at 2% of sales.
Wolf said August pending-home sales will provide the clearest indication of where September closings are headed. Buyers will also be watching the Federal Reserve’s next decision, although mortgage rates respond more directly to bond-market expectations than to the federal funds rate alone.
The resale market is giving buyers more room to negotiate. It is giving originators more properties to finance. What it is not yet providing is enough borrowers willing or able to accept the payment.
