Existing Home Sales Fall to 14-Month Low Amid Rate Hikes

Existing-home sales experienced a significant decline in August, reaching a seasonally adjusted annual rate of 3.98 million units. This figure represents a 2% decrease from July and a 1.2% drop compared to August of the previous year, marking the lowest sales volume since June 2025 when sales also fell below the 4 million threshold. This downturn ended a four-month streak of year-over-year sales increases. The primary driver for this contraction in home buying activity is the surge in mortgage rates. The 30-year fixed-rate mortgage climbed to 6.71% on September 3, its highest point in over a year, according to Freddie Mac. This escalation in borrowing costs is attributed to renewed inflation fears, which triggered a substantial sell-off in the bond market. National Association of Realtors (NAR) Chief Economist Lawrence Yun commented that mortgage rates and home sales typically move in opposite directions, making the observed dip in buying activity unsurprising given the elevated rates. Despite the cooling sales figures, home prices continue to rise. The median sales price for existing homes increased by 1.6% year-over-year to $429,100 in August, setting a new record high for the month. This marks the 38th consecutive month of annual price appreciation. Regional variations in sales performance were evident. While sales held steady month-over-month in the West, they declined in the Northeast, Midwest, and South. On an annual basis, sales decreased across all regions except the South, where they remained flat. The Northeast region saw the most substantial annual price increase, with a surge of 4.3% to $556,900, followed by the Midwest, which experienced a 3.3% growth from August 2025, reaching a median price of $340,400. Yun highlighted that despite the persistent high borrowing costs impacting sales, housing demand is being supported by rising wages. In August, wages increased by 3.2%, according to a recent jobs report that exceeded expectations. The economist noted that job creation and wage growth are traditional drivers of housing demand. The National Association of Realtors is a trade association for real estate professionals in the United States. Freddie Mac is a government-sponsored enterprise chartered by Congress to provide liquidity, stability, and affordability to the U.S. housing market.