Higher mortgage rates keep home sales stuck around year-to-date lows

Existing US home sales eked out a small monthly increase in September, despite higher mortgage rates, although sales remained near their lowest levels of the year.

Home sales rose 1.5% in September from a month earlier to a seasonally adjusted annual rate of 3.99 million, according to National Association of Realtors data released on Tuesday. Compared to a year ago, sales are down 2.2%.

Mortgage rates rose sharply in September , starting the month well below 7% and ending around 7.5%, although September's sales data largely reflects homes that went under contract in August, when rates were beginning to rise but were well below recent highs.

As buyers remain cautious, for-sale inventory has grown and homes are spending longer on the market. There were 1.6 million homes available for sale in September, the highest level since November 2019, giving buyers the upper hand in negotiations.

"It is a very tough market out there, especially with mortgage rates rising," NAR chief economist Lawrence Yun said.

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.