Existing-home sales declined for the third consecutive month in August, deepening a summer sales slowdown that has coincided with a sharp run-up in borrowing costs since May.
The seasonally adjusted annual pace of existing-home sales slid 2% from July to 3.98 million units, about 1.2% lower than a year ago and the slowest pace of sales in 14 months, according to the National Association of Realtors (NAR).
That is the first annual decline since March, which was the first full month of the ongoing Iran war. NAR says the last time the annualized pace of home sales activity fell below 4 million units was June 2025.
“Mortgage rates and home sales move in opposite directions, so it’s not surprising to see a mild dip in homebuying activity due to high mortgage rates,” noted NAR Chief Economist Lawrence Yun in a press release.
Average mortgage rates on typical 30-year home loans that began 2026 around 6% have been above 6.5% since late May, according to data from the Mortgage Bankers Association (MBA).
Existing-home sales reflect closed contract activity, meaning the August data reported by NAR on Thursday largely reflects properties that went under contract the prior month, when mortgage rates rose from an average of 6.58% during the last week of June to 6.81% by the end of July.
“Mortgage rates are at 15-month highs, straining affordability despite improved housing inventory,” said Bob Broeksmit, president and CEO of the MBA, in commentary shared with Scotsman Guide on Thursday.
With mortgage rates still averaging above 6.8% during the first week of September, sustained pressure on homebuyer purchasing power and lender pipelines is projected to continue well into 2027, according to MBA and Fannie Mae forecasts.
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Months’ supply of existing homes — which measures how long it would take to sell the current inventory of homes for sale at the current sales pace — rose to a 10-year high of 4.9 in August, up from 4.6 the previous month. That reflects a 3.2% increase in unsold inventory to 1.62 million units.
That figure also underscores how buyers nationwide are finding more purchase options to choose from as sellers continue to weather sluggish demand. Median time on market increased to 31 days in August from 29 in July.
Despite higher borrowing costs undercutting demand, August’s median existing-home sales price of $429,100 was 1.6% higher than a year ago.
A pullback in investor purchases has also suppressed overall transaction volumes, with 15% of closed home sales in August going to individual investors or second-home buyers, down from 21% one year ago.
However, Yun noted in Thursday’s report that purchase demand is “no doubt being supported by rising wages, which grew 3.1% in August,” alongside steady job growth in 2026.
“Job creation and wage growth typically drive housing demand,” he added.
Annual wage growth, while healthy, has been outpaced by inflation through much of 2026. That has translated to negative inflation-adjusted wage growth, putting pressure on household budgets across a range of spending categories.
On a regional basis, the Northeast, Midwest and South recorded monthly declines of 4%, 3.1% and 1.6% in existing-home sales, while sales across the West were flat. Annual declines of 2% or higher were posted by the Northeast, Midwest and West, while sales in the South were unchanged.
