Home sales dropped last month as mortgage rates reached highest level in over a year

Home sales declined in August as mortgage rates hit their highest levels in over a year, discouraging prospective buyers.

Existing home sales dropped 2% last month from July to a seasonally adjusted annual rate of 3.98 million homes, according to National Association of Realtors data released on Thursday. Sales are now at their slowest pace in over a year, down 1.2% from last August.

Mortgage rates spent August between 6.6% and 6.7%, levels high enough to sideline many buyers. Last week, rates hit 6.71%, their highest level since mid-2025. In recent days, rates have continued to rise in response to a global bond market sell-off and rising oil prices.

"Home sales and mortgage rates move in opposite directions, and we have seen [rates] rising" since February, said Lawrence Yun, the NAR's chief economist. The latest move higher in bond yields is "not good for the immediate short-term outlook on home sales," he added.

Sales dropped from a month ago in all parts of the country except for the West, where they were flat. The pricey Northeast saw the biggest drop in activity, with a 4% decline.

Buying and selling activity has been in a deep slump as buyers struggle with affordability. Although sales are low, supply is too, and home prices have continued to climb — the median home sold for $429,100 in August, up 1.6% from a year ago.

Lower mortgage rates at the beginning of the year mean that home sales this year are still outpacing 2025's dismal total of just over 4 million sales. Through August, sales are up 1.6% from a year ago, the NAR said.

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