• September existing-home sales rose 1.5% to a 3.99 million annualized rate, topping estimates but August was revised down to 3.93 million.
  • Median price hit a September record of $417,500, up 1.3% year-over-year, while inventory climbed to 1.60 million units—the highest for any September since 2019.
  • The modest gain may be short-lived: mortgage rates have surged above 7.4%, and pending sales data point to a weakening forward pipeline.

A Fleeting Bounce?

Sales of previously owned U.S. homes increased in September, snapping a two-month decline, but the details of the report suggest the housing market remains far from a sustained recovery. The National Association of Realtors said existing-home sales rose 1.5% last month to a seasonally adjusted annual rate of 3.99 million, modestly beating the 3.95 million consensus estimate. However, August’s pace was revised down to 3.93 million from an initial 3.98 million, underscoring the volatility in a market constrained by high borrowing costs and limited supply.

The median sale price climbed 1.3% from a year earlier to $417,500, a record high for the month of September. Inventory rose to 1.60 million units, the highest since November 2019 on a September basis, representing 4.8 months of supply. While that gives buyers more choice, it has not translated into meaningful price relief. “The combination of rising inventory and still-rising median prices is not contradictory: listings can accumulate as demand weakens, while the mix of homes that actually sell keeps the national median elevated,” noted housing analyst Bill McBride ahead of the release.

Rising Rates Threaten Demand

The improvement in September closings largely reflects contracts signed in July and August, when the 30-year fixed mortgage rate averaged around 6.54% and 6.67%, respectively, according to Freddie Mac (FMCC). Since then, rates have climbed sharply. As of October 8, the average 30-year fixed rate stood at 7.40%, up from 7.28% the prior week and well above 6.30% a year ago. That surge is expected to weigh on upcoming closings.

“Mortgage rates around 7.5% could persist until geopolitical and economic uncertainties ease,” warned NAHB chief economist Robert Dietz. The Federal Reserve added to the pressure on September 16, raising its policy rate by a quarter point to 3.75%–4.00% and citing elevated inflation. While the Fed does not directly set mortgage rates, its actions influence bond yields and expectations.

Forward-looking indicators already signal weakness. Redfin (RDFN) reported that pending home sales fell 4% month-over-month in September, near their lowest level since 2014 outside the pandemic. The share of purchase agreements that fell through reached 14.5%, the highest on record, according to Redfin. Regionally, Bright MLS reported September closed sales down 5.2% year-over-year in the Mid-Atlantic, with new pending sales down 13.5%. “Rising rates are pushing buyers against affordability limits,” said Bright MLS chief economist Lisa Sturtevant.

Supply and Affordability Constraints Persist

First-time buyers accounted for 31% of purchases in September, up slightly from 30% in August, but still historically low. Nearly half of outstanding mortgages carry rates of 4% or less, creating a lock-in effect that discourages homeowners from moving and listing their properties. Existing-home sales totaled just 4.06 million in 2024, the lowest annual pace since 1995.

Policy efforts to boost supply are ongoing but have yet to yield tangible results. An October 5 report outlined bipartisan proposals for faster zoning approvals, transit-linked incentives, and construction-cost relief. Meanwhile, a partisan Joint Economic Committee report in April argued that tariffs on imported building materials were raising costs—a claim not universally accepted.

NAR did not immediately respond to a request for comment on the September data’s sustainability. The next signals for the market will be mortgage rate movements, signed contracts, and subsequent revisions to September’s sales pace—not the modest gain itself. For now, the housing market remains in a holding pattern, with buyers and sellers alike wary of the path ahead.

Correction: An earlier version of this article misstated the months’ supply figure as 4.9 months. It was 4.8 months in September.