Existing home sales in the United States dropped to their lowest level in 14 months during August, as rising mortgage rates continued to suppress buyer demand, according to fresh data from the National Association of Realtors (NAR). At the same time, housing inventory climbed to a near seven-year peak, with properties lingering longer on the market. Despite the softer demand environment, home prices across the country still posted a year-over-year increase, underscoring how elevated financing costs and affordability challenges remain stubborn obstacles for the residential real estate sector.

The NAR reported Thursday that August existing home sales fell 2.0% month-over-month, translating to a seasonally adjusted annualized pace of 3.98 million units—the weakest reading since June 2025 and in line with economist forecasts. On a year-over-year basis, August sales were down 1.2%. Regionally, sales declined across the Northeast, Midwest, and South, while the West held steady compared with the prior month.

Because the existing home sales metric is based on closings—when transactions are finalized—the August figures largely reflect purchase contracts signed in June and July, a window when mortgage rates were on an upward trajectory. Data shows the average rate on the most common 30-year fixed mortgage hit 6.66% by the end of July, and it has since climbed further to 6.71% last week, marking the highest level in over a year. Since late February, when the United States and Israel launched strikes against Iran, the average 30-year mortgage rate has risen by more than 70 basis points.

Mortgage rates are typically tightly correlated with long-term U.S. Treasury yields, and recent upward pressure has been driven by inflation worries stemming from the Iran conflict, uncertainty over Federal Reserve monetary policy direction, and the expanding federal debt load—all of which have pushed long-term yields higher and fed through to housing borrowing costs.

NAR Chief Economist Lawrence Yun commented, "Given the elevated mortgage rate environment, a modest dip in home buying activity is hardly surprising."

Strikingly, while transaction volumes have cooled, supply on the market is swelling noticeably. August inventory of existing homes expanded 3.2% month-over-month to 1.62 million units, the highest level since November 2019, and up 5.9% from a year earlier. At the current sales pace, it would take roughly 4.9 months to exhaust the available inventory, up from 4.6 months in July and at the same time last year. The rising inventory signals that the previously ultra-tight supply conditions in the U.S. housing market are gradually easing, while also reflecting a slowdown in the pace at which homes are being sold.

The median time a listed property spent on the market lengthened to 31 days in August, up from 29 days in July, and unchanged from a year ago. Distressed sales, including foreclosures, accounted for a steady 2% of total transactions.

Even with demand under pressure and inventories building, home prices have yet to show any significant pullback. The median existing home sale price in August rose 1.6% year-over-year to $429,100. This indicates that while high mortgage rates are dampening transaction activity, they have not yet triggered a broad decline in national home values. First-time buyers represented 30% of all existing home sales in August, up from 29% in July and above the 28% recorded a year earlier. However, NAR notes that a healthy and active housing market typically requires first-time buyers to account for around 40% of purchases—a threshold that remains notably out of reach.