Sales of previously owned homes in the United States increased modestly in September but remained significantly lower than levels seen a year earlier, indicating ongoing challenges in the housing market amid rising mortgage rates and elevated home prices. The National Association of Realtors (NAR) reported on Tuesday that existing home sales rose 1.5 percent from August to a seasonally adjusted annual rate of 3.99 million units. This figure was slightly above the 3.98 million pace anticipated by economists surveyed by FactSet.

However, sales declined 2.2 percent compared with September 2022, underscoring that the market remains subdued compared to historical averages. The annual sales pace has hovered near 4 million units throughout much of 2023, falling well short of the roughly 5.2 million-unit norm seen in previous years. September marked the second consecutive month that the annualized sales rate stayed below the 4 million threshold.

The increase in monthly sales was partially driven by a downward revision to August’s figures, suggesting some volatility in recent data. Despite the slight rebound in sales, higher borrowing costs and home prices continue to dampen demand among potential buyers.

Home prices continued their upward trajectory last month, with the U.S. median sales price rising 1.3 percent compared to September 2022. The median price reached $417,500, setting a new record for the month based on data dating back to 1999. This marks the 39th consecutive month of year-over-year gains in median home prices nationally, reflecting sustained seller pricing power amid limited inventory and persistent demand pressures.

The combination of increasing mortgage rates and historically high home prices suggests a housing market that is adjusting but has yet to regain broader momentum. Analysts say the tight inventory environment coupled with affordability challenges is likely to constrain sales growth in the near term, even as interest rates exhibit some signs of stabilization.