US Home Sales Hit 12-Year Low as Mortgage Rates Spike and Inventory Surges

Key points

• Existing single-family home sales dropped 1.9% year-over-year to a 3.64 million annualized rate, the second consecutive monthly decline.
• Condo and co-op sales fell 5.4% year-over-year to a record low of 350,000 units, with supply at a record high of 6.5 months.
• The average 30-year fixed mortgage rate rose to 7.40%, the highest since late 2023, dampening buyer demand.
• Single-family home supply reached 4.6 months, the highest for September since 2015, while the national median price was $422,700.
• Affordability has improved in cities like Austin and Oakland due to falling prices, but worsened in Chicago and New York where prices hit new highs.

Background

This follows August 2026 data where sales slowed to a 3.98 million annualized pace, the slowest in over a year, with inventory at a decade-high 4.9 months. Prior reports noted that while mortgage rates were rising, they remained historically moderate compared to the post-2022 price surge, which remains the primary driver of the affordability crisis.

How outlets are covering it

Wolf Street emphasizes the 'dumpster' status of sales and highlights regional divergence, noting that affordability has improved in cities with falling prices like Austin but worsened in high-growth areas like Chicago. Semafor frames the drop as a 12-year low driven by global borrowing costs and inflation, linking it to broader economic stress. Kitco offers a more balanced view, noting a 1.5% month-over-month rise in total sales and quoting NAR economist Lawrence Yun, who suggests improved negotiating power for buyers due to higher inventory, despite the year-over-year decline.

Why it matters

The combination of record-high inventory and record-low sales signals a significant shift from the seller's market of 2021-2022. Rising mortgage rates are suppressing demand, while rising inventory suggests sellers are capitulating on prices in some markets. This trend could lead to further price corrections in high-cost areas, potentially easing the national affordability crisis over time.

What to watch

Watch for the impact of the recent jump in mortgage rates to 7.40% on closed sales in the coming months. Monitor regional price trends, particularly in cities like Austin and Oakland where prices have fallen, versus Chicago and New York where they are rising. Track condo market dynamics, as new Fannie Mae rules requiring 15% of HOA income for reserves may further pressure the sector in 2027.