US existing home sales fall to slowest pace in over a year

30-year mortgage rate hits 6.76%, highest in more than 14 months

Existing home sales dropped 2% in August from July to a seasonally adjusted annual rate of 3.98 million units, the National Association of Realtors said Thursday — the third straight monthly decline and the slowest annual pace since June 2025, the last time the annual rate fell below 4 million.

The August tally came in just short of the 4 million pace economists had forecast, according to FactSet. Sales also fell 1.2% from August 2025, though existing-home transactions for the first eight months of 2026 are running 1.6% above the same stretch of 2025, NAR said.

The drop tracks the continued climb in borrowing costs. The average rate on the benchmark 30-year fixed mortgage reached 6.76% this week, the highest level in more than 14 months. The rate had briefly dipped below 6% before the US-Iran war began in late February; since then, expectations of higher inflation tied to surging oil prices have pushed up the long-term bond yields that lenders use as a guide to pricing home loans.

NAR chief economist Lawrence Yun tied the trajectory to bond markets. “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,” Yun said. He noted the rate could soon reach 7%, given that mortgage rates tend to follow moves in the 10-year Treasury yield, which stood near 4.8% on Thursday — levels not seen since late 2023.

Despite the sales slowdown, prices continued to climb nationally. The US median sales price rose 1.6% from a year earlier to $429,100, an all-time high for August based on data going back to 1999, NAR said. Home prices have risen on an annual basis for 38 consecutive months.

Regionally, sales fell last month from July in the Northeast, Midwest and South, and were flat in the West. Prices rose fastest in the Northeast, climbing 4.3% from a year earlier amid a shortage of homes for sale relative to other regions.

Unsold inventory is rising. There were 1.62 million unsold homes at the end of August, up 3.2% from July and up 5.9% from August 2025, NAR said — still short of the roughly 2 million homes for sale that was typical before the Covid-19 pandemic. At the current sales pace, the month’s-end inventory translates to a 4.9-month supply, the highest level in more than 10 years, sitting within the four-to-six-month range that economists traditionally consider a balanced market between buyers and sellers.

According to Realtor.com, the national median home listing price fell 1.2% from a year earlier in August, and roughly 20% of listings had their initial price lowered.

First-time buyers accounted for 30% of home purchases last month, up from 29% in July and 28% in August 2025, NAR said. Historically, first-time buyers make up closer to 40% of home sales.

Navy Federal Credit Union chief economist Heather Long tied the trends to affordability. “Affordability remains a primary concern for home shoppers, as home prices, mortgage rates, property taxes and insurance costs are now significantly higher than a few years ago,” Long said. “It’s not a good time to sell your home,” she added. “Americans are hitting the pause button on homebuying.”

The US housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied US homes were essentially flat last year, stuck at a 30-year low. Years of soaring home prices, especially in the early part of this decade when rock-bottom mortgage rates fueled a buying frenzy, have left many would-be homebuyers frozen out of the market, and a chronic shortage of homes for sale — due partly to years of below-average new home construction — has helped prop up home prices even in a multi-year sales slump.

Many of the homes that closed in August probably went under contract in June or July, when the average rate on a 30-year mortgage ranged from 6.43% to 6.66%.