U. S. Home Sales Pick Up, But Challenges Remain

Sales Increase Amid Lower Mortgage Rates

In September, the U.S. housing market experienced a modest uptick in home sales. This increase was driven by a slight drop in mortgage rates and a rise in the number of available homes. Sales rose by 1.5% compared to August, marking the fastest pace since February. However, this growth is not substantial but indicates that lower mortgage rates can stimulate home buying.

Record Median Home Price

The median home price in the U.S. reached $415,200 in September, a 2.1% increase from the previous year. Home prices have been on the rise for 27 consecutive months, setting a new record for the highest median price in September since records began in 1999.

Market Slowdown Since 2022

The housing market has been sluggish since 2022 when mortgage rates began to climb from historic lows. Last year, home sales hit their lowest point in nearly 30 years. Mortgage rates started to decline in July, ahead of the Federal Reserve's interest rate cut in September, which was prompted by concerns about the job market.

Mortgage Rates and Affordability

Homes bought in September likely went under contract in July and August when the average rate on a 30-year mortgage ranged from 6.75% to 6.56%. Rates dropped further in September and October, reaching 6.27% last week.

Despite lower mortgage rates, many Americans still struggle with home affordability. Home prices have surged by 53% over the past six years, making it challenging for first-time buyers who lack equity from selling a previous home. In September, first-time buyers accounted for 30% of home sales, down from the historical average of 40%.

Inventory and Market Trends

At the end of September, there were 1.55 million unsold homes, a 1.3% increase from August and a 14% rise from the previous year. This inventory level matches a five-year high but remains below the pre-pandemic average of roughly 2 million homes.

Homes are taking longer to sell, with properties typically staying on the market for 33 days in September, up from 31 days in August and 28 days in September last year. Despite lower mortgage rates, 30% of sales in September were cash transactions, reflecting a broader trend where roughly one-third of homes sold in the first half of 2025 were paid for in cash.

Future Outlook

Mortgage rates are expected to ease further by the end of the year. However, prospective homebuyers are likely to remain cautious due to uncertain economic conditions. Home sales activity is expected to remain steady through the fourth quarter, with total 2025 transactions ending only slightly above last year's figures.