Sales of previously owned homes in the United States declined in August to their slowest annual pace in over a year, as rising mortgage rates and higher home prices continued to challenge buyers. The National Association of Realtors (NAR) reported a 2 percent drop in existing home sales from July, bringing the seasonally adjusted annual rate to 3.98 million units. This marks the third consecutive monthly decrease in sales and a 1.2 percent decline compared with August 2025.

Economists had anticipated sales near the 4 million annual pace, according to FactSet data, making the latest figures slightly below expectations. Lawrence Yun, chief economist at NAR, noted the inverse relationship between mortgage rates and home sales, highlighting ongoing increases in borrowing costs since early 2025.

Despite recent declines, home sales have remained relatively steady throughout 2026, with total transactions through the first eight months running 1.6 percent higher than the same period in 2025. However, the current sales pace remains well below the historic norm of approximately 5.2 million annual sales. The last time annual sales fell below 4 million was in June 2025.

The housing market’s sluggishness is closely linked to rising mortgage rates, which have climbed steadily amid geopolitical tensions and inflation concerns. The conflict between the United States and Iran, beginning in late February, has contributed to surging oil prices and elevated inflation expectations. These factors have pushed long-term bond yields higher, influencing the cost of home loans. The average rate on a 30-year fixed mortgage recently reached 6.76 percent, the highest level in more than 14 months, having briefly fallen below 6 percent prior to the conflict.

Yun indicated that mortgage rates could soon approach 7 percent, following the trajectory of the 10-year Treasury yield, which stood at 4.92 percent as of Thursday morning, a level not seen since late 2023.

While sales have slowed, home prices continue to rise nationally. The median sales price hit $429,100 in August, up 1.6 percent from a year earlier and reaching a record high for the month based on data dating back to 1999. Home prices have increased annually for 38 consecutive months.

The broader housing market has struggled since 2022 when mortgage rates began rising from pandemic-era lows. Sales last year were nearly flat at a 30-year low. Years of rapid price appreciation, fueled initially by historically low mortgage rates, have priced many potential buyers out of the market. A persistent shortage of available homes, exacerbated by below-average new construction, has also contributed to sustained high prices amid weak sales.

Regionally, existing home sales fell in the Northeast, Midwest, and South in August, while remaining flat in the West. Price increases were most pronounced in the Northeast, where median home values climbed 4.3 percent year-over-year, driven in part by particularly tight inventory conditions relative to other regions.