The United States housing market posted a slight improvement in September, as the latest data indicated that existing-home sales climbed 1.5% from the prior month. Yet the gain was modest when measured against the same period last year, where sales fell 2.2%. The figures come as mortgage costs remain elevated and home prices continue to set new highs for the month of September. Analysts describe the environment as a “tough market,” where buyers who can afford the current financing terms enjoy a broader selection of listings, while many potential purchasers are forced to pause their plans.
These dynamics are captured in the seasonally adjusted annual rate (SAAR) a metric that projects the yearly total if the current monthly pace persisted. For September, the SAAR reached 3.99 million units, nudging just above the 3.98 million forecast of economists. The modest rise reflects a revision of August figures downward, underscoring how volatile the market has become since the pandemic-era low in mortgage rates began to reverse in 2022.
Sales volume and price momentum
Despite the yearly dip, the median sales price for existing homes surged 1.3% to $417,500, marking the highest September median on record dating back to 1999. This price increase represents the 39th consecutive month of year-over-year growth, highlighting the resilience of home values even as buyer participation softens. Single-family properties led the price climb, with a median of $422,700, while condominiums and co-ops posted a median of $363,700, both up roughly 1.2% from the previous year.
Regionally, the market displayed mixed signals. The South and West recorded month-over-month sales gains of about 2.8%, whereas the Midwest held steady and the Northeast slipped by 2.1%. Even in areas with declining activity, median prices continued to rise, reflecting a scarcity of affordable inventory that pushes buyers to compete for the available stock.
Mortgage rates and buyer affordability
Borrowing costs remain a central barrier. The average 30-year fixed-rate mortgage hovered around 6.86% in September, up from 6.67% the month before and significantly higher than the sub-6% levels seen before the geopolitical tensions that began in early 2024. At its peak earlier in the year, the rate reached 7.4%, the highest point in nearly three years. Higher rates translate into hundreds of dollars more in monthly payments, squeezing the housing affordability index down to 105.4, a slight decline from 106.7 a year earlier.
Buyer composition also shifted. First-time homebuyers accounted for roughly 31% of September transactions, a modest rise from August’s 30%. Cash purchases made up 27% of deals, unchanged from the previous month but down from 30% a year ago. Investor activity grew, with individual investors and second-home buyers representing 20% of sales, up from 15% in August, suggesting that those with liquid capital are capitalising on the expanded inventory.
Inventory growth and market balance
Inventory levels finally showed a noticeable uptick. At month-end, there were 1.60 million unsold homes, a 1.9% increase from August and a 4.6% rise compared with September 2025. This translates to a months-of-supply figure of 4.8 months, unchanged from the prior month but above the pre-pandemic level of 4.0 months recorded in September 2019. While still below long-term historical norms near 5.2 million annual sales, the higher stock offers buyers more negotiating power and longer listing times for sellers.
Regional inventory trends mirrored sales activity. The South and West saw the most pronounced inventory gains, reinforcing the modest sales rebounds in those areas. The Midwest’s inventory held steady, and the Northeast experienced a slight contraction, aligning with its sales decline. Sellers in markets with abundant supply are being advised to price homes realistically, often offering incentives or discounts to attract wary borrowers facing steep mortgage rates.
Buyers who can lock in current rates or transact with cash benefit from a broader selection, while the majority continue to grapple with affordability challenges. As the year progresses, the balance between inventory growth and rate stability will determine whether the modest uplift becomes a sustained recovery or a fleeting blip.
