Existing-Home Sales Rose in September—But 7% Mortgage Rates Are Still Choking Affordability

What the September sales report actually says

Existing-home sales increased 1.5% in September to a seasonally adjusted annual rate of 3.99 million, but were still 2.2% lower than a year earlier. That puts late-summer activity among the slowest months of 2026, even with the small monthly improvement. [nar.realtor]

Prices remain the other half of the equation. The median existing-home sale price rose 1.3% year over year to $417,500 (a record high for September), which means buyers are trying to absorb both elevated prices and elevated financing costs at the same time. [nar.realtor][realtor.com]

Regionally, the monthly uptick was concentrated in the South and West, while the Northeast declined and the Midwest was flat. Year over year, sales were down in every region—another sign that demand is still constrained nationally. [nar.realtor]

Inventory is rising, but it’s still not a normal market

On the supply side, total existing-home inventory increased 1.9% from August to 1.60 million units, which equals about 4.8 months of supply at the current sales pace. Inventory is higher than a year ago as well, giving buyers more choices than they had during the tightest part of the post-pandemic period. [nar.realtor][eyeonhousing.org]

That shift is showing up in market texture. Homes spent a median 33 days on the market in September, up from 31 days in August. More time on market typically translates to more negotiation—concessions, credits, and selective price cuts—especially in metros where listings are building up. [nar.realtor][eyeonhousing.org]

Still, the supply backdrop is being shaped by owner behavior as much as new listings. A key reason prices have been slow to crack is that many homeowners don’t have to sell and can wait out weaker demand, limiting the kind of forced selling that would normally push prices down faster. [wsj.com]

Affordability: the constraint that won’t let up

Mortgage rates are doing the heavy lifting in today’s affordability squeeze. Freddie Mac’s Primary Mortgage Market Survey shows the 30-year fixed rate averaged 7.40% as of October 8, 2026, up from 7.28% the prior week. Even September’s average rate (6.86%) was materially higher than a year earlier. [freddiemac.com][nar.realtor]

NAR’s Housing Affordability Index for September registered 105.4, down from 106.7 a year ago—consistent with the idea that slightly better inventory hasn’t been enough to offset higher borrowing costs and sticky prices. [nar.realtor]

Buyer mix offers another clue about who can still transact. First-time buyers were 31% of September sales, while all-cash purchases were 27%. Investors and second-home buyers made up 20% of transactions, indicating that rate-sensitive owner-occupants are still competing with groups that may have more flexibility on financing. [nar.realtor]

What to watch next (October–December)

The biggest caveat is timing: September closings often reflect contracts signed weeks earlier, before the latest run-up in mortgage rates. If rates stay in the 7% range, the market could lose the small gains seen in September as buyers re-price what they can afford. [eyeonhousing.org][freddiemac.com]

Practically, the next few months are likely to be less about big national price declines and more about micro-adjustments: more seller incentives, more price cuts in overheated pockets, and wider differences across regions. Buyers should watch not just list prices, but also concessions and days on market as the clearest signal of softening.