US home sales fall again despite the most supply in a decade
Sales dropped 2% in August to the slowest pace since June 2025. The median price still set an August record, and the market is splitting by price bracket.
American home sales fell again in August even though there are more houses on the market than at any point in over a decade — a combination that says the problem is not supply.
Sales of previously owned homes dropped 2% from July to an annualised 3.98 million units, the slowest pace since June 2025, according to the National Association of Realtors. Inventory reached a 4.9-month supply, the highest in more than ten years. Prices rose anyway.
The numbers that do not fit together
| Measure | August | vs July | vs a year ago |
|---|---|---|---|
| Existing home sales | 3.98m annualised | −2% | −1.2% |
| Homes for sale | 1.62m | +3.2% | +5.9% |
| Months of supply | 4.9 | — | — |
| Median price | $429,100 | — | +1.6% |
More houses for sale and fewer of them selling should push prices down. Instead the median price set a new record for the month of August.
The explanation is that the extra supply is not turning into transactions, because the constraint sits on the demand side. Buyers are not absent because they cannot find a house. They are absent because they cannot afford the monthly payment on one.
Why August's figure is really June and July's news
There is a timing quirk worth understanding before reading too much into the monthly drop.
The count is based on closings, so these sales were contracts signed in June and July, when mortgage rates were higher than in the spring. Rates moved sharply higher in the middle of July.
August's data is therefore a report on early-summer borrowing costs, not on current conditions. The weakness was felt hardest in the Northeast and Midwest.
"Mortgage rates and home sales move in opposite directions," said Lawrence Yun, the Realtors' chief economist, so it was "not surprising to see a mild dip in home buying activity due to high mortgage rates".
Yun also pointed to the wider picture, noting that prices are rising and that existing home sales are up 1.6% year-to-date through the first eight months.
A market splitting by price
The most revealing figures are not the headline ones. They are the breakdown by bracket, which shows two different markets running in opposite directions.
Compared with August 2025, sales of homes priced between $100,000 and $250,000 fell 10%. Sales of homes priced above $1 million rose 3.9%.
A 10% fall at the entry level against a 3.9% rise above a million dollars is a split the headline figure hides entirely — and it sits alongside Yun's explanation that sales move opposite to mortgage rates.
The regional price data points the same way. Gains were strongest in the Northeast, where inventory is lowest, and the West was the only region where the median price fell year on year.
What 4.9 months of supply actually means
Months of supply is the measure of how long it would take to sell every listed home at the current sales pace. It is a ratio, and it can rise for two quite different reasons.
More listings will do it. So will slower sales. This month both moved in the same direction — inventory up 3.2% on July, sales down 2% — which is why the figure reached a decade high.
That distinction matters for anyone reading the number as a sign of a buyer's market. A supply figure inflated by transactions not happening is not the same as one produced by a wave of new construction. The houses are sitting there because the buyers cannot reach them.
What would change it
Only one variable really moves this market, and it is not in the housing industry's control.
If mortgage rates come down, the September and October closings — reflecting contracts signed now — would be the first to show it. If they hold at current levels, inventory keeps building, sales keep grinding at the slowest pace since mid-2025, and the split between the entry level and the million-dollar market keeps widening.
Prices are the last thing to give way in a market like this, because sellers who do not have to move simply do not. A record August median alongside the weakest sales in over a year is not a contradiction. It is a description of a market where the people setting prices and the people who need to buy are no longer the same population.
