Rising mortgage rates and dwindling first-time buyers signal a market under pressure
Existing-home sales fell 1.7% in July to a seasonally adjusted annual rate of 4.06 million, the second consecutive monthly decline, according to data released Tuesday by the National Association of Realtors (NAR).
Despite the pullback, sales remained 0.7% ahead of July 2025, and year-to-date transactions are up 2.4% from the same period last year.
The decline lands against a backdrop of rising borrowing costs. The average 30-year fixed-rate mortgage climbed to 6.54% in July, per Freddie Mac's Primary Mortgage Market Survey, up from 6.49% in June.
By early August, the rate had reached 6.69%, its highest level since July 2025, following a six-week upward march driven in part by ongoing geopolitical tensions that have kept inflation elevated since February 2026.
"Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months," said NAR chief economist Dr. Lawrence Yun.
"There's no doubt that the housing market would be thriving if average mortgage rates were to return near 6%."
Sam Khater of Freddie Mac said that while higher mortgage rates continue to affect affordability, improving inventory and slightly lower listing prices suggest the housing market is showing signs of adjustment.https://t.co/yiihzcmduM
— Mortgage Professional America Magazine (@MPAMagazineUS) August 7, 2026
Rate pressure tightens inventory further
The supply picture offered brokers little encouragement. Total unsold inventory fell 1.9% from June to 1.54 million units. That's a 4.6-month supply, unchanged from both the prior month and a year earlier.
As June's existing-home sales decline and record prices showed, compressed supply has been feeding sustained price growth throughout the year.
The median existing-home price reached $434,100 in July, up 2.0% from a year ago and the 37th consecutive month of year-over-year appreciation.
Results varied by region. The Northeast posted a 2.0% monthly gain, with a median price of $563,800, up 5.2% year-over-year.
The South fell 3.1%; the Midwest dropped 2.0%. The West held flat.
Yun noted that in smaller Midwest cities, a household income of $60,000 would be sufficient to qualify for a median-priced home, a level of accessibility largely absent from coastal markets.
Mortgage Professional America
National Association of Realtors · Existing-Home Sales · July 2026
National snapshot
Total sales (SAAR)
4.06M
▼ 1.7% from June
▲ 0.7% from July 2025
Median home price
$434,100
▲ 2.0% year-over-year
37th consecutive month up
Unsold inventory
1.54M
▼ 1.9% from June
▼ 0.6% from July 2025
Months of supply
4.6 mo
Unchanged MoM & YoY
30-yr fixed rate
6.54%
▲ from 6.49% in June
▼ from 6.72% July 2025
Affordability index
103.3
▲ from 98.3 July 2025
≥100 = qualifying income met
Days on market
29
▲ from 28 in June & July 2025
First-time buyers
29%
▼ from 33% in June
28% in July 2025
Regional detail
| Region | Sales (SAAR) | MoM | YoY | Median price | Price YoY |
|---|---|---|---|---|---|
| Northeast | 500,000 | +2.0% | 0.0% | $563,800 | +5.2% |
| Midwest | 970,000 | −2.0% | +2.1% | $342,900 | +2.8% |
| South | 1,860,000 | −3.1% | 0.0% | $371,700 | +0.9% |
| West | 730,000 | 0.0% | +1.4% | $622,200 | +0.2% |
| National | 4,060,000 | −1.7% | +0.7% | $434,100 | +2.0% |
Property type breakdown
Single-family homes
3.69M SAAR
▼ 1.9% MoM · ▲ 0.8% YoY
$440,300 median (+1.9% YoY)
Condos & co-ops
370K SAAR
Unchanged MoM & YoY
$371,800 median (+2.2% YoY)
Sources: National Association of Realtors Existing-Home Sales Report, July 2026; Freddie Mac Primary Mortgage Market Survey, July 2026. All sales figures are seasonally adjusted annual rates (SAAR). Affordability Index readings of 100 or above indicate a household earning the median income can qualify for a mortgage on the median-priced home.
First-time buyers slip further from the market
First-time buyers accounted for just 29% of July transactions, down from 33% in June — well short of the 40% share NAR associates with a healthy market.
The Housing Affordability Index improved to 103.3 in July, up from 98.3 a year earlier, with gains recorded across all four regions — the West led with a 7.3% improvement.
Yet as pending home sales posted steepest monthly drop of 2026, affordability gains have yet to translate into sustained transaction volume.
Cash buyers held at 26% of transactions, up from 25% in June, while investors accounted for 14%, slightly above the prior month.
Homes spent 29 days on the market on average, up from 28 in June.
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