Home sales dip below 4 million; supply hits decade high

The average 30-year fixed-rate mortgage rose to 6.67% in August, up from 6.54% in July and 6.59% a year earlier, according to Freddie Mac. Rates ran below year-ago levels for much of the spring, when cheaper borrowing helped lift sales.

Total housing supply reached 1.62 million units in August, the first time it topped 1.6 million since November 2019, and stood at a 4.9-month supply, the highest in more than a decade, according to NAR.

"The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate," said Lawrence Yun, NAR's chief economist. The 4.9-month supply still sits below the six months generally considered a balanced market.

Yun tied the sales dip to borrowing costs while arguing demand is holding up. He said higher mortgage rates and home sales "move in opposite directions," but pointed to 3.1% wage growth in August and 643,000 net new jobs since the start of the year as support for continued homebuying.

Housing affordability improved even as sales slipped. NAR's affordability index registered 104.7 in August, up from 101.2 a year earlier, with gains across every region.

The cooling comes despite federal efforts to lower housing costs. In January, President Donald Trump directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities to bring down rates, and Congress in June passed the 21st Century ROAD to Housing Act, a supply-focused overhaul that became law in July. Rates have since risen and inventory remains below a balanced market.

First-time buyers made up 30% of sales in August, up from 29% in July and 28% a year earlier. The median existing-home price for single-family homes reached $434,800, up 1.7% from a year ago, while the condo and co-op median hit $371,600.

Whether the inventory buildup marks a turn toward a buyer's market or a seasonal blip remains unsettled. Supply is climbing and negotiating room is widening, but with rates above year-ago levels and prices still higher than a year ago, the market that greets fall buyers is one where homes are easier to find but no cheaper to own.