Existing home sales declined by 2% in August compared to July, reaching an annualized rate of 3.98 million units, according to the National Association of Realtors (NAR). This decrease marks the slowest sales pace since June 2025 and was most pronounced in the Northeast and Midwest regions. The decline reflects contracts likely signed during June and July, when mortgage rates surged sharply, making homebuyers more cautious.

Despite the slowdown in sales, the housing supply increased, with 1.62 million homes available at the end of August. This represented a 4.9-month supply, the highest level seen in over ten years, as inventory rose 3.2% from July and 5.9% year over year. Nonetheless, the median price for existing homes rose to $429,100, up 1.6% from the previous August and setting a new record for the month of August. Price growth was especially strong in the Northeast, where housing inventory remains relatively limited.

The market dynamics indicated a contrast in buyer behavior across price segments. Sales for homes priced between $100,000 and $250,000 dropped by 10% year over year, while properties priced over $1 million saw a 3.9% increase in sales, suggesting strong interest at the higher end of the market. Homes lingered longer on the market in August, averaging 31 days compared to 29 days in July. Cash buyers accounted for 27% of all purchases, slightly more than in July but down from August 2025.

First-time buyers represented 30% of August sales, showing a slight increase from both the prior month and the same time last year. However, investor and second-home buyer participation declined significantly, making up just 15% of sales in August compared to 21% the year before. Experts, including NAR’s chief economist Lawrence Yun, attribute the tempered sales activity largely to elevated mortgage rates, which tend to suppress buying activity even as home prices continue to rise.