Existing home sales ticked up slightly — then rates hit 7%

Though September saw an uptick in existing home sales compared to August, the annualized level still missed the 4 million mark — even before 30-year mortgage rates jumped.

Housing market slowed to a crawl as summer ended: Last month’s annualized existing home sales pace came in at 3.99 million, according to the National Association of Realtors. That’s up from August’s revised pace of 3.93 million but 2.2% behind the September 2025 rate of 4.08 million.

Sales were down year-over-year across the U.S. The West and the Northeast saw the biggest declines (down 5.2% and 4.1%, respectively), followed by the Midwest (down 2.1%) and the South (down 0.5%).

Annualized pace likely to continue: August and September marked the two slowest months for home sales so far this year as fewer buyers qualified to purchase a home amid rising rates, said Lawrence Yun, chief economist at NAR. Rates for August and September closings were likely locked in earlier in the summer, when 30-year rates were hovering in the 6.5% range.

With rates expected to remain above 7% for the rest of this year, the annualized existing home sales pace will likely remain below 4 million for the next several quarters, said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Housing has experienced quite a fall from the overheated market of 2021. Existing home sales totaled 6.89 million that year before declining to 4.06 million in 2024 and hitting that same level again in 2025.

Inventory nearing pre-pandemic range: This year’s sluggish existing home sales pace has helped correct the national inventory shortage. NAR estimated that total housing inventory stood at 1.6 million units last month, up 4.6% from a year ago. That puts the supply of unsold inventory at 4.8 months, which is around pre-pandemic levels. Whether inventory grows from here will depend on how sellers react to this tough market.

What will the slowdown do to home prices? The question emerging now is whether home prices will start to decline. NAR’s Oct. 13 report estimated that the median existing home sale price in September was $417,500, up 1.3% from a year ago. September marked the 39th consecutive month of year-over-year price increases.

“A pullback on demand will weigh on home prices, although that’s likely to be countered to some degree by sellers stepping back from the market,” Vanden Houten said.

Competition in the new home sector: With existing home prices remaining stubbornly high, there could be an opportunity for buyers who are considering purchasing a newly-built home instead, according to Ali Wolf, chief economist at NewHomeSource and Zonda. 

The median new home sale price has fallen below the median existing home price in recent months as builders use buydowns and other incentives to lure buyers. “This is a trend…