Sales of previously owned homes in the United States showed little movement in August 2025, reflecting the continued impact of elevated mortgage rates on the housing market. According to the National Association of Realtors (NAR), existing home sales came in at 4 million units on a seasonally adjusted, annualized basis. This represents a slight 0.2% decline from July, though sales were still 1.8% higher than August of last year. The Midwest emerged as the strongest-performing region, while the Northeast lagged behind, hampered by high prices and constrained supply.
It’s important to note that this data reflects closings, meaning the transactions were initiated in June and July, when mortgage rates were roughly 50 basis points higher than current levels. Mortgage rates began declining sharply at the start of September, so the easing won’t be reflected in these numbers.
Upper-End Market Outpaces Affordable Homes
The high-end segment of the market continued to show resilience. Homes priced above $1 million saw an 8% year-over-year increase in sales, making this the top-performing segment. In contrast, sales of homes priced under $100,000 fell over 10% from last year, highlighting the struggle of lower-income buyers to compete amid limited inventory and rising home costs.
“Record-high housing wealth and stock market gains are supporting homeowners trading up,” said Lawrence Yun, NAR’s chief economist. “However, sales of affordable homes remain constrained by tight supply, limiting options for first-time buyers and lower-income households.”
Regional Trends Highlight Affordability Gaps
The Midwest outperformed other regions, benefiting from relatively lower home prices and more balanced affordability. Median home prices there were 22% below the national median, which has helped sustain sales. Meanwhile, higher-cost areas in the Northeast and West Coast continue to see sluggish movement, particularly for first-time buyers priced out of entry-level homes.
Housing Supply Adjustments
One of the most significant shifts in the market has been in inventory levels. After several months of gains earlier in 2025, housing supply fell 1.3% in August compared with July, though it remains 11.7% higher than a year ago. This marks the first monthly decline since the start of the year.
Many potential sellers are hesitating to list their homes due to slower price appreciation and lingering high mortgage rates, while others are pulling back from the market entirely, waiting for conditions to improve. As a result, the months-of-supply metric remained relatively lean at 4.6 months, a level historically considered tight but not extreme.
Prices Remain Firm
Despite slower sales, home prices continue to hold up. The median price of an existing home sold in August was $422,600, up 2% from a year ago and marking the 26th consecutive month of annual price gains. Strong price resilience is being supported by limited supply, continued demand from upper-income buyers, and historically low levels of first-time homebuyer participation.
Homes are also spending slightly longer on the market, averaging 31 days in August, compared with 26 days a year ago. Cash buyers remain a dominant force, representing 28% of all sales, up from 26% in August 2024. First-time buyers accounted for 28% of sales, historically low, reflecting ongoing affordability challenges in key markets.
Market Outlook
The housing market remains in a delicate balance, with declining mortgage rates expected to provide some relief in the coming months. However, supply constraints, elevated prices in key regions, and persistent affordability challenges for entry-level buyers suggest that market activity will continue to favor higher-end homes and experienced buyers in the near term.
As the economy evolves and interest rates adjust, analysts will be watching for shifts in first-time buyer activity and regional supply dynamics, both of which will be critical in shaping the trajectory of the U.S. housing market heading into the final quarter of 2025. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
