Existing-home sales increased 1.5% in September, but borrowing costs reaching 7.4% and weakening buyer demand threaten to reverse the modest recovery despite growing housing inventory.
By yourNEWS Media Newsroom
Sales of previously owned U.S. homes edged higher in September, but rising mortgage rates and stubbornly high prices continued to discourage buyers, raising concerns that the housing market could weaken further during the final months of 2026.
Existing-home sales increased 1.5% from August to a seasonally adjusted annual rate of 3.99 million, according to figures released Tuesday by the National Association of Realtors. Sales remained 2.2% below September 2025 levels, with August and September recording the slowest activity of the year.
The modest improvement came before a substantial increase in mortgage rates that has made homeownership considerably more expensive.
The average 30-year fixed mortgage rate climbed from approximately 6.7% in early September to 7.28% in early October, reaching 7.4% on October 8, according to Freddie Mac’s latest mortgage survey. That marked the highest level since November 2023 and compared with 6.3% a year earlier.
“Further increases in mortgage rates in recent weeks mean fewer buyers can qualify to purchase a home,” NAR chief economist Lawrence Yun said.
September’s completed sales largely reflect purchase agreements negotiated before the latest borrowing-cost increases, suggesting the impact of higher rates may become more apparent in upcoming reports.
Newer data already indicates weakening demand.
A Redfin report released October 12 found that pending home sales declined 4% in September from August, the largest monthly decrease in more than three years.
Pending transactions, which measure homes under contract but not yet sold, fell to their lowest level since spring 2014, excluding the temporary collapse in activity during the early months of the COVID-19 pandemic.
The slowdown comes as elevated energy prices and inflation concerns connected to the ongoing Middle East conflict have pushed Treasury yields higher. Mortgage rates typically move in the same direction as the yield on the 10-year Treasury note.
Despite weakening demand, home prices continued rising nationally.
The median existing-home price reached $417,500 in September, increasing 1.3% from a year earlier. It was the highest median price recorded for September and marked the 39th consecutive month of annual price increases.
Regional differences remained significant. The Northeast recorded the strongest annual price appreciation, rising 4.7% to $523,600, followed by the Midwest, where prices increased 3.1% to $329,600.
Prices in the South edged up 0.2% to $361,000, while the West was the only region reporting an annual decline, slipping 0.3% to $613,600.
Sales increased in the South and West compared with August, remained unchanged in the Midwest and declined in the Northeast. All four regions recorded fewer transactions than a year earlier.
Although affordability remains a major obstacle, buyers have gained greater negotiating leverage as the supply of available homes expands.
Housing inventory reached 1.60 million units at the end of September, up 1.9% from August and 4.6% from September 2025.
At the current sales pace, available inventory represented a 4.8-month supply, unchanged from August but higher than the 4.5 months recorded a year earlier.
Homes also took longer to sell, spending a median of 33 days on the market, compared with 31 days in August.
First-time buyers accounted for 31% of September purchases, compared with 30% a year earlier, suggesting that some households continue entering the market despite higher financing costs.
However, the larger selection of properties has increased pressure on sellers to adjust expectations, particularly in areas where listings are remaining unsold for extended periods.
“Home sellers need to be realistic about local market conditions, which could require price discounts and other incentives to attract buyers,” Yun said.
The combination of rising borrowing costs, elevated prices and declining pending sales suggests that September’s modest increase in completed transactions may be difficult to sustain.
For buyers able to afford current mortgage rates, increased inventory offers more choices and potentially greater negotiating power. For households dependent on financing, however, higher monthly payments remain a significant barrier to purchasing a home.
The coming months will help determine whether sellers respond with additional price reductions or whether elevated borrowing costs continue to suppress sales heading into 2027.
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