Home sales fall in August despite the highest supply in over a decade

• Sales activity decreased most in the Northeast and Midwest, reflecting contracts signed in June-July when mortgage rates were elevated
• Housing inventory increased 5.9% year-over-year to 1.62 million homes, yet prices continued rising with the strongest gains in the Northeast where supply is tightest
• Market polarization intensified: sales of homes priced $100K-$250K fell 10% year-over-year while $1M+ homes rose 3.9%; investor/second-home buyers dropped from 21% to 15% of sales

Summary: U.S. Home Sales Decline Amid High Rates and Rising Prices

Key Findings:

Existing home sales fell 2% month-over-month in August to 3.98 million units (seasonally adjusted annualized basis), marking the slowest pace since June 2025. Year-over-year sales declined 1.2%, with the Northeast and Midwest experiencing the sharpest drops.

Pricing Dynamics:

Despite weakening sales, the median home price reached $429,100 in August—up 1.6% year-over-year and a record high for the month. Price gains were strongest in the Northeast, where inventory remains tightest. The West was the only region showing price declines.

Supply Metrics:

Housing inventory increased to 1.62 million units, up 3.2% from July and 5.9% year-over-year. This represents a 4.9-month supply at current sales rates—the highest level in over a decade. Homes averaged 31 days on market versus 29 days in July.

Market Segmentation:

Sales activity diverged sharply by price point. Homes priced between $100,000-$250,000 saw sales drop 10% year-over-year, while properties above $1 million gained 3.9%—the only segment showing growth. Cash buyers represented 27% of transactions, while first-time buyers comprised 30% of sales. Notably, investor and second-home buyer activity fell to 15%, down from 21% the previous year.

Market Implications:

The National Association of Realtors attributes the decline to elevated mortgage rates during the contract signing period (June-July). The data suggests a bifurcated market favoring luxury properties while affordability challenges constrain entry-level and mid-market segments, potentially signaling ongoing housing market stratification.