WASHINGTON, DC — Sales of previously owned U.S. homes fell in August to their weakest annual pace in more than a year as buyers faced higher mortgage rates and stubbornly rising prices. The National Association of Realtors said existing-home sales dropped 2% from July to a seasonally adjusted annual rate of 3.98 million units.
That marked the third straight monthly decline and put sales slightly below the 4 million pace economists had expected. Compared with August last year, sales were down 1.2%. Even so, sales for the first eight months of 2026 were still running 1.6% above the same stretch of 2025, showing that the market has cooled without completely stalling.
Mortgage rates moved higher while buyers waited on better conditions
Lawrence Yun, the association’s chief economist, said the direction of sales has tracked closely with borrowing costs. He pointed to mortgage rates rising steadily since February, noting that home sales and mortgage rates typically move in opposite directions.
The average rate on a 30-year mortgage reached 6.76% this week, its highest level in more than 14 months. Yun said that figure could approach 7% if Treasury yields keep climbing, since mortgage pricing generally follows the 10-year Treasury. The 10-year yield stood at 4.92% on Thursday morning, a level not seen since late 2023.
Much of August’s sales activity likely reflected contracts signed in June and July, when the average 30-year mortgage rate ranged from 6.43% to 6.66%. That timing matters because closing data usually lags the rate environment buyers saw when they made offers.
Prices kept rising even as the market slowed
Higher financing costs have not stopped prices from climbing nationally. The U.S. median sales price rose 1.6% in August from a year earlier to $429,100, which the National Association of Realtors said was an all-time high for the month of August in data going back to 1999.
That continued a long streak of annual price gains. Home prices have now risen for 38 consecutive months, a sign that the housing shortage is still supporting values even as sales weaken. The broader market has been stuck in a slump since 2022, when mortgage rates began moving up from pandemic-era lows.
Sales of existing homes were essentially flat last year, hovering at a 30-year low. Years of sharp price increases, especially early in the decade when rates were near historic lows, left many would-be buyers unable to compete, while a lack of homes for sale kept asking prices elevated.
Inventory is improving, but the market is still short of normal
One of the few signs of relief for buyers is that more homes are sitting on the market. 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 typical before the COVID-19 pandemic, but it represents the highest month-end supply in more than 10 years. At the current sales pace, inventory works out to 4.9 months of supply. Traditionally, 4 to 6 months is considered a balanced market.
Homes are taking longer to sell, which is helping build up choices for shoppers who can afford current mortgage rates or pay cash. 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 cut.
Regional sales and prices showed uneven pressure across the country
The slowdown was not evenly spread. Sales fell in August from July in the Northeast, Midwest and South, while sales were flat in the West. The Northeast also saw the fastest price growth, with values up 4.3% from August last year amid a shortage of homes for sale relative to other regions.
That regional spread points to different levels of supply and demand across the country. In some areas, buyers are seeing more room to negotiate because homes are lingering longer. In tighter markets, however, price growth is still running hot despite weaker sales volume.
The national increase in available homes is giving buyers more options than they had earlier in the year, but not enough to reset the market. The pace remains well below the historical norm of roughly 5.2 million annual sales.
First-time buyers gained a small share while affordability stayed tight
First-time buyers accounted for 30% of purchases in August, up from 29% in July and 28% a year earlier. That is still below the roughly 40% share that has historically been more typical, underscoring how hard it remains for newcomers to get into the market.
Heather Long, chief economist at Navy Federal Credit Union, said affordability is still being squeezed by a combination of home prices, mortgage rates, property taxes and insurance costs that are much higher than a few years ago. Those pressures are also affecting homeowners who might otherwise be ready to list their properties.
Long said it is not a good time to sell, because many Americans are pausing their homebuying plans. For buyers who do move ahead, the better inventory picture may help, but the monthly payment burden remains the main obstacle.
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