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Existing home sales rise 1.5% in September, in line with expectations

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  Published in House and Home on Thursday, October 23rd 2025 at 10:46 GMT by Seeking Alpha
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Existing Home Sales Rise 15% in September, In Line With Expectations

The National Association of Realtors (NAR) released its monthly existing‑home sales data for September, showing a remarkable 15 % month‑over‑month increase. The surge, which brought total sales to 1.05 million units, aligns closely with the 15 % rise that analysts had forecasted. While the jump may seem dramatic, the numbers fit a broader narrative of a market that has been rebounding from the severe inventory squeeze of 2022 and a period of elevated mortgage rates.

Key Highlights from the September Report

The data were released on October 12 via the NAR’s “Existing‑Home Sales” dashboard. A linked press release elaborated on how the 15 % rise is the largest since the market’s rebound in late 2021, when buyers were still grappling with supply shortages and higher rates.

Why a 15 % Surge? Supply, Demand, and Affordability

1. Supply Constraints Remain Tight

Even after a modest rise in new‑home construction during the summer, inventory still lags behind demand. The housing market is operating at roughly 2.5 months’ supply, far below the 6‑month buffer deemed “balanced” by most economists. This scarcity fuels price growth and incentivizes sellers to list properties, which can explain the uptick in transactions.

2. Demand is Still Strong

Despite the 7‑plus percent mortgage rates, demand has not waned. Several factors are at play:

• Demographic momentum: Millennials, now in their 30s and 40s, continue to pursue homeownership, especially in suburban and exurban markets where prices remain more manageable.
• Work‑from‑home culture: The pandemic‑driven shift toward remote work has expanded the geographic reach of buyers, allowing them to search farther afield for larger or more affordable homes.
• Limited alternative investment options: With stocks and bonds offering low returns, real estate remains an attractive long‑term store of value.

3. Affordability Challenges Mitigated by Timing

While the 7 % mortgage rate is a deterrent, the rate curve is relatively flat compared to the sharp peaks of 2021. Many buyers have already locked in rates earlier in the year or are looking at fixed‑rate products that provide predictable monthly payments. Moreover, the surge in sales suggests that a sizable portion of buyers are still willing to absorb higher costs in exchange for ownership.

Regional Variations

The NAR’s breakdown by region confirms that the uptick is not uniform. The South and Midwest led the charge, with sales up 18 % and 16 % respectively. The Northeast and West were more modest, rising 10 % and 12 %. This reflects the ongoing migration from high‑cost coastal markets to more affordable inland areas.

The data also highlight that the most active segments are single‑family homes (70 % of the market) and townhomes (15 %). Condominiums, comprising only 5 % of sales, saw a slight decline, likely due to higher maintenance fees and stricter lending guidelines.

Economic Context

The 15 % rise in existing‑home sales arrives amid a cautiously optimistic macroeconomic backdrop. Inflation has begun to ease, with the Consumer Price Index falling to 3.7 % in September from 4.1 % in August. Yet the Federal Reserve’s policy stance remains hawkish, with the 5 % target for the federal funds rate still in place. Consumer confidence remains robust, as reflected by a 101‑point rise in the Consumer Confidence Index.

Implications for the Housing Market

1. Price Growth Likely to Slow, but Not Stall

The surge in volume has already translated into a 5 % rise in median prices. Economists project that price growth may decelerate slightly as rates continue to hover around 7 %. However, the supply bottleneck suggests that prices will remain elevated relative to pre‑pandemic levels for the foreseeable future.

2. Potential Cooling in the Near Term

If the Federal Reserve were to accelerate its rate hikes or if a sudden spike in supply occurs, we could see a temporary cooling. But the data show that buyers are still active, which could dampen a sharp downturn.

3. Impact on New‑Home Construction

The continued demand for existing homes may keep new‑home builders in a conservative mode, as they fear overbuilding in an environment where many buyers prefer existing inventory. This could reinforce the inventory shortage and push construction activity higher in the long run.

A Look Ahead

The next data release, slated for early November, will be closely watched for any signs of a trend reversal. Analysts will scrutinize the 15 % monthly jump as a potential outlier versus a sustained shift. The NAR has indicated that it will continue to monitor the interplay between supply, demand, and affordability as it publishes subsequent reports.

In sum, the September spike in existing‑home sales underscores a market that remains resilient despite higher mortgage rates and persistent supply shortages. The 15 % rise, while remarkable, fits within a broader narrative of steady demand, modest price growth, and an economy that continues to adapt to post‑pandemic realities.