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US home sales remained sluggish in August despite late-summer mortgage rate slide

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  Published in House and Home on Friday, September 26th 2025 at 1:01 GMT by Daily Camera
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U.S. Home Sales Stay in Slow‑Motion: The Numbers, the Drivers, and What It Means for Buyers

By [Journalist’s Name]
Published September 25, 2025

In a market that has already felt the aftershocks of a tight‑fist housing supply, the latest quarterly report from the National Association of Realtors (NAR) confirms a continued slowdown in home sales. The data, released on September 25, shows that total U.S. home sales fell to 2.12 million units for the quarter—an 8.4 % drop from the prior quarter and a 3.1 % decline year‑over‑year. While the decline is modest compared to the 15‑percent plunge seen in early 2024, the trend signals that the market is still grappling with high borrowing costs, limited inventory, and a shifting appetite among home‑buyers.

What the Numbers Say

The drop in median price is noteworthy. For the first time since mid‑2024, the median price of a single‑family home fell below the $400k threshold, sliding from $420,800 in June. Meanwhile, mortgage rates have settled at 6.55 %, still considerably higher than the 3.8 % average of 2023, and well above the 5 % threshold many buyers view as a tipping point for affordability.

The NAR Housing Market Index—an aggregate measure of buyer and seller activity across 14 metropolitan areas—dropped to –7.2, indicating a deeper sellers’ market than the last quarter’s –5.9. The index reflects both higher interest rates and a tightening inventory, which together have shifted the market toward buyers but at a slower pace than in the spring of 2025.

The Underlying Drivers

1. Mortgage Rates Remain Sticky

Freddie Mac’s monthly “Mortgage Market Survey” highlights that the average 30‑year fixed‑rate hovered at 6.53 % throughout the quarter. According to the survey, 57 % of borrowers who applied for new mortgages cited “high rates” as the primary reason they did not purchase. The Federal Reserve’s 25‑basis‑point hike in June has kept rates above the 5 % comfort zone, reducing the purchase power of many buyers, especially those who were still operating on the high‑interest environment of 2024.

2. Supply Constraints Continue

Housing starts, as reported by the U.S. Census Bureau, rose 4.6 % YoY, but this growth is largely concentrated in the multifamily sector. The inventory of single‑family homes on the market remains at a historic low of 1.7 months—meaning homes are selling in roughly 38 days. This scarcity keeps competition high for the handful of homes that do become available, which can further inflate asking prices despite the broader decline in median sales price.

3. Buyer Demographics Shift

Data from the NAR’s “Home Buyer Survey” indicates that millennials and Gen Xers now account for 55 % of all first‑time homebuyers in the U.S., a 12 % increase from 2024. However, many of these buyers are working within tighter budgets, as the average household debt-to-income ratio has risen to 30 %—up from 27 % in 2024. These factors combine to create a market where buyers are cautious, lenders are stricter, and sellers are quick to negotiate.

4. Economic Outlook

The Bureau of Labor Statistics reports a 2.3 % increase in the Consumer Price Index (CPI) for August, continuing a trend of moderate inflation. Although the Fed’s rate hikes appear to be tacking down inflation, the lingering uncertainty about the pace of further tightening is dampening consumer confidence. The U.S. Commerce Department’s quarterly GDP report indicates a modest 1.2 % growth in Q2, reinforcing a market that is neither booming nor severely depressed but is operating at a muted pace.

What This Means for Different Stakeholders

• Buyers: The market remains tough for buyers, but there are opportunities for those willing to accept slightly longer search periods. The median price dip offers a breakeven point for buyers who are currently on the fence, especially if they secure a fixed rate that locks in lower payments. However, they should be prepared to compete in a market where inventory remains scarce and selling timelines are short.

• Sellers: While the sellers’ market index still shows buyers dominating, the slower price growth indicates that selling at the top of the market is becoming increasingly difficult. Sellers in highly sought‑after areas—particularly in the Midwest and Northeast—should anticipate competitive bids but may need to adjust expectations on final sale prices.

• Lenders: Mortgage lenders face a dual challenge: higher default risks in an environment of higher rates and lower transaction volumes. Freddie Mac’s “Mortgage-Backed Securities” report suggests a slight increase in delinquency rates among subprime borrowers, signaling the need for more robust underwriting practices.

• Policy Makers: The continued slowdown in sales underscores the importance of targeted housing policies. Programs that incentivize new construction—particularly affordable housing units—and streamline permitting processes could help alleviate inventory shortages. Moreover, a continued focus on financial literacy and debt management could equip future buyers with better tools to navigate a high‑rate market.

Looking Ahead

The NAR’s “Housing Market Forecast” for 2026 is cautiously optimistic, predicting a 2.5 % rise in sales and a 1.8 % increase in median price. However, the forecast is contingent upon several variables: the Federal Reserve’s future policy stance, the pace of inflation, and the potential emergence of supply‑side solutions. If mortgage rates were to drop below 5.5 % in the second half of 2026, a measurable uptick in sales would likely follow.

For now, the U.S. home‑sales market remains a mixed bag—buyer enthusiasm tempered by affordability challenges, and sellers holding onto inventory in a competitive but slow environment. As the market edges toward the summer of 2026, both buyers and sellers will need to be vigilant, staying attuned to the subtle shifts in rates, inventory, and broader economic indicators.

The information presented here is based on the September 25, 2025 report from the National Association of Realtors, supplemented by data from Freddie Mac, the U.S. Census Bureau, the Bureau of Labor Statistics, and the Federal Reserve. For a deeper dive, readers can consult the original NAR report and related datasets directly.