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ILLUSTRATIVE IMAGE: A residential property for sale, reflecting conditions in the US housing market as mortgage costs continue to challenge buyers. |
US Home Sales Rise 1.5% as High Mortgage Rates Weigh on Demand
WASHINGTON — October 14, 2026
Sales of previously owned homes in the United States rose slightly in September, but high mortgage rates and rising prices continued to put pressure on the housing market. The increase offered little sign of a strong recovery, as borrowing costs made homeownership difficult for many Americans, particularly younger buyers.
Existing home sales increased 1.5% to an annualized rate of 3.99 million units, according to the National Association of Realtors (NAR). However, sales in August were revised to show a larger decline of 3.2%, compared with the previously reported drop of 2.0%. September sales also remained below the four-million-unit pace for a second consecutive month.
Compared with September last year, home sales fell 2.2%. The NAR said visits to property lockboxes, which can indicate interest from potential buyers, were down 3% from a year earlier. The figures point to continued weak demand despite a larger supply of homes available for sale.
Mortgage costs remain a major obstacle. The average rate on a 30-year fixed-rate mortgage reached 7.40% last week, its highest level since November 2023, according to Freddie Mac. That was up from 7.28% the previous week, while the rate had increased by 1.42 percentage points since the end of February.
The increase in borrowing costs has coincided with the US-Israeli war with Iran, which the report says has contributed to inflation concerns and higher US Treasury yields. Mortgage rates tend to move in line with Treasury yields. The Federal Reserve also raised its benchmark interest rate by 0.25 percentage points in September, bringing it to a range of 3.75% to 4.00%, and signalled that further increases could follow.
Housing inventory rose 1.9% in September to 1.60 million existing homes, the highest level since November 2019. Supply was 4.6% higher than a year earlier. At the current pace of sales, it would take about 4.8 months to sell the available inventory, unchanged from August but above the 4.5 months recorded a year earlier.
Economists said the increase in available homes did not necessarily indicate a stronger market. Some properties were taking longer to sell, suggesting that inventory growth reflected slower demand rather than a large influx of new sellers.
Despite the additional supply, the median price of an existing home rose 1.3% from a year earlier to $417,500. That was the highest median price recorded for any September. Most homes sold during the month were priced between $250,000 and $750,000.
The market also showed differences across price ranges. Sales of homes costing $1 million or more increased 4.1% compared with a year earlier, while sales in other price categories declined. The steepest drops occurred among homes priced below $250,000, highlighting the difficulty of finding affordable starter homes.
First-time buyers accounted for 31% of sales, up from 30% in August and a year earlier. However, the NAR has said that a share of around 40% is needed for a healthier housing market. Investors and buyers purchasing second homes accounted for 20% of transactions, compared with 15% in August and a year earlier.
Homes also took longer to sell than in the previous month. The median time a property remained on the market rose to 33 days in September from 31 days in August, although it was unchanged from a year earlier. Distressed sales, including foreclosures, remained at 2% of transactions, while cash purchases accounted for 27%, down from 30% a year earlier.
Regional results were mixed. Sales increased in the South and West, declined in the Northeast and remained unchanged in the Midwest. Realtors also reported limited optimism about the coming months: only 8% expected sales to increase over the next three months, the lowest share since late 2023.
The September figures suggest that the US housing market continues to face a difficult balance between rising inventory and weak affordability. Unless borrowing costs and prices become more manageable, the modest increase in sales may do little to improve access to homeownership for many buyers.
