Sales down, inventory up

Existing-home sales ran at a seasonally adjusted annual rate of 3.98 million in August, down 2.0% from July and 1.2% below August 2025, the National Association of Realtors reported on September 10.

Unsold inventory stood at 1.62 million units at the end of August, 3.2% higher than a month earlier. At the August sales pace that equals 4.9 months of supply, which NAR described as the highest level in over ten years.

The median existing-home sales price was $429,100, up 1.6% from a year earlier. Sales for the first eight months of 2026 were up 1.6% year to date, meaning the August weakness had not yet erased the year's cumulative gain.

Prices rising into rising supply

Analysis: the combination of a decade-high months-supply reading and a 1.6% annual price increase is the defining oddity of this market. Textbook expectation would pair deepening inventory with softening prices.

Two features explain the gap. First, 4.9 months of supply is high relative to the past decade but not by longer historical standards; balanced markets have conventionally been described as running near six months. Second, the inventory increase is driven partly by homes sitting longer rather than by a surge of new listings, and a slow-moving listing does not force a price reduction the way a distressed seller does.

That price growth is also nominal. With annual consumer inflation at 3.4% in August, a 1.6% nominal gain in the median price is a real decline, consistent with the twelve-month run of real declines recorded in the Case-Shiller data.

The demand backdrop

BLS reported nonfarm payrolls up 162,000 in August, unemployment steady at 4.1% and average hourly earnings up 3.1% year over year — a labor market still adding jobs, though with pay growth below the 3.4% headline CPI rate.

What has not improved is financing. Freddie Mac's survey put the 30-year fixed average at 6.95% in the week ending September 17, up from 6.26% a year earlier.

One methodological caution belongs alongside these figures: existing-home sales count closings, which typically reflect contracts signed 30 to 60 days earlier. The August figure therefore describes purchase decisions made in June and July, when the 30-year fixed average was lower than it was by mid-September. Buyers reacting to the September rate level will not appear in this series until the October and November reports.

What happens to the price picture from here

Three measures now describe the same market in compatible terms, which makes the near-term path easier to reason about.

Inventory at 1.62 million units is rising while sales fall, and 4.9 months of supply is the highest in over a decade. Nominal prices are still up 1.6% annually. Real prices, adjusting for 3.4% consumer inflation, are falling.

Analysis: the most likely continuation is more of the same rather than a break in either direction. Sellers with low fixed-rate mortgages have little pressure to accept a loss, which supports nominal prices; buyers constrained by 6.95% financing cannot bid them higher, which caps them. The result is a market that clears slowly at flat nominal prices while inflation does the affordability work.

A break would require one of those conditions to change — a meaningful drop in mortgage rates, or a source of forced selling. Neither is visible in the current data. The homeowner vacancy rate of 1.2% reported by Census for the second quarter indicates almost no distressed or abandoned owner inventory sitting on the market.