Existing-Home Sales Head for Another Slow Year. What Could Turn the Housing Market Around.

Existing-home sales data will be released Thursday. (Zak Bennett/Bloomberg)

Key Points

About This Summary

• Existing-home sales decreased 0.2% in August to a seasonally adjusted annual rate of 4.0 million, slightly above economists’ expectations.
• The median price of an existing home sold in August was $422,600, representing a 2% increase from the previous year.
• New home sales in August surged by approximately 21% to an annual rate of 800,000, the fastest pace since 2022.

Sales of previously owned homes were about flat in August compared with the previous month, putting this year on track for the lowest annual sales since the mid-1990s.

But lower mortgage rates could help turn things around, some economists say.

The National Association of Realtors’ measure of existing-home sales fell 0.2% from July to a seasonally adjusted annual rate of 4.0 million in August. Economists had expected sales would fall further, to a 3.96 million rate.

The median existing home sold for $422,600, up 2% from a year ago.

“Home sales have been sluggish over the past few years due to elevated mortgage rates and limited inventory,” Lawrence Yun, the trade group’s chief economist, said in a statement.

Existing-home sales plunged nearly 19% in 2023 to the lowest level since 1995 as mortgage rates rose rapidly. Sales drifted slightly lower in 2024 as home prices hung onto their pandemic gains and mortgage rates remained above 6%.

The existing-homes reading stands in stark contrast to August’s new home sales reading, released Wednesday. That reading soared past consensus estimates to a seasonally adjusted annual rate of 800,000, up roughly 21% and the fastest pace since 2022.

The difference is less an indication of divergence in the new and existing markets, but more of a reflection of differences in data collection.

Existing-home sales measure closings, while new home sales log contract signings or deposit payments. A more analogous read of the market for previously owned homes will come from the National Association of Realtors’ pending home sales index, which is set for release Monday. The census data are also known to be subject to sometimes significant revisions.

August’s new home sales reading “is at odds with other indicators and likely overstates any improvement in housing activity,” Nancy Vanden Houten, the lead economist at Oxford Economics, said Wednesday. “However, we do expect home sales to improve as mortgage rates decline and the labor market regains its footing.”

That goes for existing-home sales, too, NAR’s Yun noted Thursday.

“Mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months,” the economist said.

Modestly lower mortgage rates could result in a stronger showing this fall, which is normally a quiet time for home sales. Mortgage rates measured by Mortgage News Daily have recently been around 6.35%—still higher than the under-6% rates economists frequently say are needed for a housing market pickup, but lower than the roughly 7% rate at which they began the year.

Hopes abound a drop in mortgage rates will revitalize the housing market in 2026. Secondary mortgage market giant Fannie Mae said earlier this week that it expects existing-home sales to rise nearly 10% in 2026 as mortgage rates end next year just below 6%.

But 2025 so far has looked like a wash. Fannie Mae’s economists expect that this year’s existing-home sales total will set a fresh three-decade low—for the third year in a row.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com