US existing home sales slip to slowest annual pace in over a year

Sales of previously owned homes in the United States slowed in August to their weakest annual pace in more than a year, as buyers contended with costlier mortgages and still-rising prices.

Existing home sales dropped 2% from July to a seasonally adjusted annual rate of 3.98 million units, the National Association of Realtors said on Thursday. It marked the third consecutive monthly decline, and sales were down 1.2% from a year earlier. The figure came in just below the roughly 4 million pace economists had anticipated.

"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.

Sales have largely hovered near a 4-million annual pace since 2023, well below the historical norm of about 5.2 million. The last time the annual pace fell below 4 million was in June 2025. Even so, sales through the first eight months of this year are running 1.6% ahead of the same period in 2025, the association said.

Borrowing costs have been the main constraint. Mortgage rates have climbed steadily since the US-Iran war began in late February, as expectations of higher inflation amid surging oil prices pushed up the long-term bond yields that lenders use to price home loans. The average rate on the benchmark 30-year mortgage reached 6.71% last week, its highest in more than a year.

Yun noted the rate could soon touch 7%, since mortgage rates tend to track the 10-year Treasury yield, which was at 4.92% on Thursday morning and continues to rise.

Prices, meanwhile, kept climbing. The median US sales price rose 1.6% in August from a year earlier to $429,100 — an all-time high for the month of August in data going back to 1999. Prices have now risen on an annual basis for 38 straight months.

The market has been in a slump since 2022, when mortgage rates began rising from pandemic-era lows. Sales of previously owned homes were essentially flat last year, stuck at a 30-year low. Years of steep price gains — particularly early this decade, when ultra-low rates fuelled a buying frenzy — have shut many would-be buyers out of the market, while a chronic shortage of homes for sale, partly the result of years of below-average construction, has helped keep prices elevated.

Many homes sold last month likely went under contract in June and July, when the average 30-year mortgage rate ranged from 6.43% to 6.66%.

The slowdown is leaving unsold properties on the market longer, lifting the number of available homes. Inventory remains well below historical norms, but there were 1.62 million unsold homes at the end of last month, up 3.2% from July and 5.9% from August last year. That is still short of the roughly 2 million homes typically for sale before the COVID-19 pandemic.

At the current sales pace, August's month-end inventory amounts to a 4.9-month supply — the highest in more than a decade. A four- to six-month supply is traditionally viewed as a balanced market between buyers and sellers.