Sales of previously occupied U.S. homes fell in August to their slowest annual pace in over a year, as higher mortgage rates and persistent home prices deterred potential buyers. The National Association of Realtors reported Thursday that existing home sales declined 2% from July to a seasonally adjusted annual rate of 3.98 million units. This marks the third consecutive monthly decrease.
"It's not a surprise home sales and mortgage rates move in the opposite direction, and we have seen mortgage rates rising, rising, rising from February," said Lawrence Yun, NAR's chief economist. The average rate on the benchmark 30-year mortgage reached 6.71% last week, its highest level in more than a year, and is projected to approach 7%. These elevated rates are driven by increasing long-term bond yields, influenced by expectations of higher inflation amid surging oil prices, particularly since the conflict between the U.S. and Iran began in late February.
Despite the slowdown in sales, home prices continued to climb nationally. The U.S. median sales price rose 1.6% in August compared to the previous year, reaching $429,100, an all-time high for the month of August based on data extending back to 1999. Home prices have now increased on an annual basis for 38 consecutive months. The housing market has faced challenges since 2022 when mortgage rates began their ascent from pandemic-era lows. In 2025, existing home sales remained largely flat, settling at a 30-year low.
Years of significant home price appreciation, particularly in the early 2020s when low mortgage rates fueled a buying surge, have priced many prospective buyers out of the market. This situation is exacerbated by a chronic shortage of homes for sale, partly due to years of below-average new home construction, which has helped sustain home prices even during a multiyear sales slump.
The recent sales slowdown is contributing to homes staying on the market longer, leading to an increase in available properties. While overall home inventory levels remain below historical norms, there were 1.62 million unsold homes at the end of August, a 3.2% increase from July and a 5.9% rise from August of the previous year. This figure is still below the approximately 2 million homes typically available before the COVID-19 pandemic. August's month-end inventory represents a 4.9-month supply at the current sales pace, the highest level in over a decade, nearing the 4-to-6-month range considered a balanced market.