WASHINGTON, DC — Sales of previously occupied homes in the United States slipped in August to their slowest annual pace in more than a year as higher mortgage rates and rising prices kept buyers cautious. The National Association of Realtors said existing home sales fell 2% from July to a seasonally adjusted annual rate of 3.98 million units.
That marked the third monthly decline in a row and left sales 1.2% below August a year earlier. The figure was just under the 4 million pace economists had expected, according to FactSet. Despite the latest slowdown, sales for the first eight months of 2026 were still running 1.6% ahead of the same stretch of 2025, NAR said.
Borrowing costs keep shaping the housing market
Lawrence Yun, NAR’s chief economist, said the pattern fits what homebuyers have been seeing for months: when mortgage rates rise, sales tend to fall. He pointed to a steady climb in rates beginning in February, saying the direction of borrowing costs has been a major drag on demand.
The average rate on a benchmark 30-year mortgage reached 6.76% this week, its highest point in more than 14 months. Before the war between the United States and Iran began in late February, that rate briefly dipped below 6%. Yun said it could soon move toward 7% if Treasury yields remain elevated.
The 10-year Treasury yield, which lenders often use as a benchmark, was at 4.92% on Thursday morning, a level not seen since late 2023.
Prices keep climbing even as demand cools
Even with fewer sales, home values continued to move higher nationally in August. NAR said the median US sales price rose 1.6% from a year earlier to $429,100, which is an all-time high for August in data going back to 1999.
That extends a long run of yearly price gains. Home prices have now increased on an annual basis for 38 straight months. For buyers, the challenge is not only the sticker price but also the full monthly cost of owning, which has been pushed higher by mortgage rates, property taxes and insurance.
Heather Long, chief economist at Navy Federal Credit Union, said affordability remains the central problem for many shoppers. She said those pressures are also making some homeowners hesitate to list their properties.
Inventory is improving, but it is still below normal
The sales slowdown has also meant more homes sitting on the market longer, which is gradually adding to supply. NAR said there were 1.62 million unsold homes at the end of August, up 3.2% from July and 5.9% from a year earlier.
That is still below the roughly 2 million homes that were typically available before the Covid-19 pandemic. But at the current sales pace, August inventory amounted to a 4.9-month supply, the highest in more than 10 years. A four- to six-month supply is generally considered balanced between buyers and sellers.
The larger selection gives some buyers more negotiating room, especially those who can afford today’s rates or pay cash outright.
Regional patterns show the Northeast still running hottest
Sales fell from July in the Northeast, Midwest and South, while they were flat in the West. The Northeast also continued to see stronger price growth than the rest of the country, with median prices up 4.3% from August last year.
NAR said the regional price gap reflects a tighter supply of homes for sale in the Northeast than in other parts of the country. That shortage has helped keep prices elevated even as activity has slowed nationally.
Across the broader market, the combination of uneven inventory and weaker demand is leaving buyers with more choices in some places, but not enough relief to quickly reverse affordability pressures.
First-time buyers are still present, but they remain short of their usual share
First-time buyers accounted for 30% of home purchases in August, up from 29% in July and 28% a year earlier, NAR said. That is an improvement, but still well below the roughly 40% share that would be considered typical.
Long said many households are effectively pausing their search because the cost of buying has risen so much in such a short period. She said prices, rates, taxes and insurance are all working against affordability at once.
The broader housing market has been stuck in a slump since 2022, when mortgage rates began rising from pandemic-era lows. Sales were essentially flat last year and remained near a 30-year low, reflecting years of soaring prices and a shortage of homes for sale.
What the latest numbers mean for buyers and sellers
The current market is giving a mixed signal. Buyers who can qualify at today’s rates may find more homes to choose from and a bit more leverage on terms, especially as some listing prices are being cut. Realtor.com said the national median listing price fell 1.2% from a year earlier in August, and about 20% of listings had an initial price reduction.
At the same time, homeowners trying to sell may face a slower path to closing and a thinner pool of motivated buyers. Long summed up the mood bluntly: it is not a good time to sell, and many Americans are putting homebuying on hold.
For now, the market remains defined by a standoff between stubborn affordability problems and a modestly improving supply picture. That mix is helping keep sales below the levels that once defined a normal housing market.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
