US Home Sales Hit 14-Month Low as Borrowing Costs Bite

Paying off your mortgage used to be something people aspired to. Now, many Americans fantasize about simply getting one.

The National Association of Realtors said Thursday that US home sales fell 2% month-over-month in August to a 14-month low. The seasonally adjusted annual rate of 3.98 million residences, the lowest since June 2025, was weighed down by stubbornly high mortgage rates and home prices.

Gen Z’s Morbid Wish

Two major factors are driving up borrowing costs. First, the resumption of US and Iranian strikes in the Persian Gulf means oil prices are surging again. International benchmark Brent crude closed above $107 Thursday, up 22.5% from a month ago. Higher energy prices mean the market prices in higher inflation, which pushes up long-term Treasury yields. Second, concerns about the US public debt, which at $40 trillion has surpassed even the price of one beer at MetLife Stadium, are also driving up bond yields.

Bond yields heavily influence how lenders price home loans, meaning they’re helping to drive up mortgage rates. According to Mortgage News Daily data, the popular 30-year fixed mortgage rate surpassed 7% for the first time since May 2025 on Thursday. “Mortgage rates and home sales move in opposite directions, so it’s not surprising to see a mild dip in home-buying activity due to high mortgage rates,” said Lawrence Yun, NAR’s chief economist.

Home prices, meanwhile, aren’t yielding to anyone. The median existing home sold for $429,100 in August, up 1.6% year-over-year. Compare that to research by Apollo Global Management, which suggests 56% of US households can only afford a home under $300,000. No wonder 58% of Gen Z respondents said in a survey by Clever last month that they’re rooting for a housing market crash. The market is proving resilient, even if macro conditions prevent it from breaking out of the current downcycle:

• “Home prices are rising, and existing home sales are actually up 1.6% year-to-date through the first eight months of the year,” Yun said.
• The high cost of mortgages is likely disincentivizing potential sellers who locked up a better rate or refinanced years ago when borrowing costs were lower. Apollo Global’s research shows only a quarter of mortgages have a rate above 6%, suggesting there’s plenty of supply that could come on the market if and when borrowing costs fall.

Plenty Inventory: In unabashedly good news for those looking for a place to call their own, existing housing inventory rose 3.2% to 1.62 million homes last month. That’s the highest level since November 2019 and a 5.9% increase from a year ago. “The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate,” Yun noted. So buy away, if you can afford it.