Sales fall as the 30-year mortgage rate marches towards 7%

There were 1.62 million housing units for sale in August in the U.S. - the most since November 2019.

U.S. home sales sank to the lowest level in 14 months, but lack of demand pushed the number of homes for sale up to nearly a seven-year high.

Sales of existing homes in America in August fell to a 3.98 million pace, the lowest level since June 2025. Existing-home sales were down 1.2% in August as compared with the same month last year, according to data released by the National Association of Realtors, a trade group, on Thursday.

Single-family-home sales fell to the lowest level since June 2025.

"Mortgage rates and home sales move in opposite directions, so it's not surprising to see a mild dip in home buying activity due to high mortgage rates," Lawrence Yun, chief economist at NAR, said in a statement.

The housing market has been in a deep downturn over the past few years. A combination of high mortgage rates, years of tight housing supply and record-high prices has discouraged many would-be first-time buyers and repeat buyers. Homeowners with ultralow mortgage rates have little incentive to jump back into the housing market, absent a strong motivation to do so.

In recent months, rising mortgage rates have put off even the buyers who have remained in the fray. The 30-year mortgage rate has been on the rise over the last few months, as surging oil prices spark concerns over inflationary pressures in the U.S. economy, which in turn is pressuring the bond market and, in turn, the 30-year mortgage rate. The 30-year mortgage rate generally moves in tandem with the 10-year Treasury note.

Related: Is it a bad time to buy a home? Buyers say yes, data show.

The 30-year home loan has moved even higher in September, setting the stage for another weak month for home sales. On Wednesday, the 30-year mortgage rate averaged 6.97%, according to Mortgage News Daily.

"With a rate hike in play at next week's Fed meeting, higher mortgage rates and more pressure on home sales are likely in the near-term," Danielle Hale, chief economist at Realtor.com, said in a statement.

The silver lining for the housing market

One silver lining in the housing market is that supply is at nearly a seven-year high. The total number of homes for sale in America in August was about 1.62 million, NAR said, which was up nearly 6% from the same month last year. "This was the first time since November 2019 that inventory exceeded 1.6 million units," the trade group noted.

The housing market is "tilting from a sellers market ... almost towards a buyers market where buyers are able to negotiate," NAR chief economist Yun said on a call with reporters.

The median price of an existing home in America in August was $429,100, up 1.6% from a year before. That's an all-time high for the month of August.

Related: How these Gen Z workers managed to buy homes in their early 20s

Industry data signaled a jump in listings in several metro areas. San Jose, Calif., saw a 25.5% increase in for-sale listings in August, per Redfin; a 15.8% jump in homes for sale in Nashville, Tenn.; a 13.7% increase in listings in Seattle.

Buyers are gaining leverage as home sales slow

Slow sales and rising supply is allowing more buyers to score deals. About three in five homes nationally sold below their original asking price in August, Redfin, a real-estate brokerage, said. In some markets in Florida and Texas, that proportion was even higher. In West Palm Beach, Fla., 85% of homes in August sold below their asking price; in Austin, 82%.

"More listings mean buyers can take their time, compare homes and negotiate instead of feeling pressured to jump on the first decent property they see," Chen Zhao, head of economics research at Redfin, said in a post.

"In many parts of the country, buyers may be able to negotiate on price, repairs or closing costs - and walk away if the numbers don't work," she added. "That doesn't make a home within reach for everyone, but, for people who can afford to buy now, it's a much friendlier market than it was a few years ago."

Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.

-Aarthi Swaminathan