Existing-Home Sales Rise 1.5% in September as Falling Mortgage Rates Boost Demand

September saw a boost in sales of previously owned homes. Existing-home sales increased by 1.5% month-over-month in September, according to the National Association of Realtors^®—and a 4.1% increase year over year.

“As anticipated, falling mortgage rates are lifting home sales,” said NAR Chief Economist Lawrence Yun. “Improving housing affordability is also contributing to the increase in sales.”

The current mortgage rate has been hovering on the lower end of 6% with the new weekly rate for a 30-year fixed mortgage set to be announced by Freddie Mac today.

The Northeast, South and West all saw an increase, but sales fell in the Midwest. Meanwhile for overall sales year over year, the Northeast and South remained consistent, joined by the Midwest maintaining an increase, but it was out West where sales remained flat.

“Inventory is matching a five-year high, though it remains below pre-COVID levels,” Yun added. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.”

The median existing-home price was $415,200, according to NAR—that's up 2.1% from one year ago ($406,700). It marks the 27^th consecutive month of year-over-year price increases.

Seasonal sales

The NAR economist points out that there's always a seasonal pattern during the transition from autumn to the winter months.

The total housing inventory is 1.55 million units, up 1.3% from August and up 14.0% from September 2024 (1.36 million). NAR data shows a 4.6-month supply of unsold inventory—no change from August and up from 4.2 months in September 2024.

Yun said median list prices tend to be lower during those periods, compared to summer months.

Condominium and co-op sales saw no change month over month or year over year; sales remain at a seasonally adjusted annual rate of 370,000 units. But NAR notes that condo prices in the South are down compared to a year ago. The median condo price is $360,300—down 0.6% from September 2024.

The economist points out that with mortgage rates trending down, this has helped closing activity in September. At the same time, he said the government shutdown, so far, has caused a "little friction in some component of the housing sales market."

The Federal Reserve is set to meet next week, and there's anticipation that policymakers are expected to lower rates by a quarter of a percentage point.

"I think the mortgage market is trying to price in a further potential rate cut by the Federal Reserve in the upcoming months," adds Yun. "But we always know that a lower mortgage rate is a major influence for home sales."

At least 30% of sales were first-time homebuyers, which is up from 28% from July and 26% in September 2024.

Cash sales made up 30% of the transactions in September. That number is up from 28% in August, but unchanged from the same time last year.

Only 2% of September sales were foreclosures or short sales—that number remains unchanged from August and September of 2024.

"The lock-in effect is not as strong with the passage of time, so more choices for consumers, but I would still say we need another 300,000 homes coming onto the market to truly get us back to the pre-COVID levels," Yun adds.

Sales by region

The Northeast saw a 2.1% increase in sales month over month to an annual rate of 490,000 units—up 4.3% year over year. The median price was $500,300, according to NAR. That's up 4.1% from September 2024.

The South saw a 1.6% increase in sales month over month to an annual rate of 1.86 million—up 6.9% year over year. The median price was $364,500, up 1.2% from September 2024.

The West saw a 5.5% increase in sales month over month to an annual rate of 770,000, with no change year over year. The median price was $619,100, up 0.4% from September 2024.

But the Midwest was the only region which saw a 2.1% decrease in sales month over month to an annual rate of 940,000—up 2.2% year over year. The median price was $320,800—up 4.7% from September 2024.

"Looking ahead, home sales in October and November will reflect purchases that began during what's typically the best time to buy a home based on typical seasonal patterns, when buyers can count on an edge from limited competition and relatively abundant inventory that usually results in lower home prices," says Danielle Hale, chief economist at Realtor.com®.

"This is in addition to the benefits of mortgage rates that have fallen to the lowest level in nearly a year and market momentum shifts that have resulted in more widespread price cuts, particularly for homes in lower price tiers. Taken together, these could help sustain a modest pickup in transaction activity."