WASHINGTON (October 23, 2025) – Existing-home sales increased by 1.5% month-over-month in September, according to the National Association of REALTORS® Existing-Home Sales Report. The Report provides the real estate ecosystem, including agents and homebuyers and sellers, with data on the level of home sales, price, and inventory.
It’s about time. We are seeing a housing revival with existing home sales on a 7-month high for the first time since the 2008-09 Great Recession (wide gray band in FRED graph), as reported by the National Association of Realtors (NAR).
The housing market has been stuck in part because the Fed held off cutting interest rates until its September FOMC. The cut was just -0.25%, and two more rate cuts are expected this year.
That may start a more sustained housing recovery, as fixed mortgage rates are also beginning to decline despite rising inflation since April and Trump’s retaliatory tariffs. (Bond holders don’t like inflation because it reduces the value of bonds.)
"As anticipated, falling mortgage rates are lifting home sales," said NAR Chief Economist Dr. Lawrence Yun. "Improving housing affordability is also contributing to the increase in sales."
Affordability has improved because "Inventory is matching a five-year high, though it remains below pre-COVID levels," Yun added. "Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth."
The 30-year conforming fixed mortgage rate for best credit holders has dipped below 6% to about 5.875% for 0 pts. in closing costs, or 5.50% for a 1 pt. origination fee. The 15-year fixed rate is now 5.25% for 0 pts., and 4.875%, 1 pt. at this writing.
This year’s housing revival first showed up in a boost in new-home sales, according to the National Association of Homebuilders (NAHB). Sales of newly built single-family homes jumped 20.5% earlier in August, to a seasonally adjusted annual rate of 800,000 from an upwardly revised reading in July, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
Much of the new-home sales boost was due to a construction surge to as much as 1.9 million annual units after the COVID-19 pandemic, seasonally adjusted. That and record low interest rates during the pandemic caused bloated inventories that builders are attempting to reduce. So they are offering interest rate buydowns to reduce mortgage rates. It cuts into builders’ profits but adds little to the sales price.
Housing construction has declined since then, decreasing 8.5% in August to a seasonally adjusted annual rate of 1.31 million units and construction will probably remain lower until more buyers come into the housing market as mortgage rates decline further.
What about mortgage rates? That hasn’t stopped homebuyers before. The 30-year conforming fixed rate hovered between 7.5% to 5.0% from the beginning of the housing bubble in 2000 to 2010 when homebuyers went wild with subprime loans, until the Great Recession.
The moral of this tale is that homebuyers and lenders have always found a way to finance a purchase with an almost infinite variety of mortgage choices. But the U.S. population is beginning to shrink because of the immigration restrictions. Builders and governments must find more creative solutions to affordable housing to bring more young adults into the housing market.
Challenging affordability conditions have always created headwinds for the housing sector, but that never stopped those that wanted to own a residence during the era of double-digit interest rates in the 1980s and 90s.
The average 30-year conforming fixed rate mortgage didn’t drop below 10% until the 1990s and 7.5% until 2001.
I foresee lenders finding creative ways to finance more homebuyers in the coming years as well.
Harlan Green © 2025
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