Sales of previously occupied U.S. homes picked up in October 2025, reaching their quickest pace since February as easing borrowing costs lured more buyers back into the market. Existing home sales rose 1.2% from September to a seasonally adjusted annual rate of 4.10 million units, according to the National Association of Realtors (NAR). That slightly beat economists’ expectations for about 4.09 million annualized sales compiled by FactSet.
Compared with a year earlier, transactions were up 1.7%, marking another sign that the market is slowly emerging from the deep slump triggered in 2022, when mortgage rates began climbing from historic lows. Even so, annualized sales remain well below the pre-pandemic norm of around 5.2 million a year and have hovered near a 4 million pace since 2023, underscoring how far activity has to go before conditions resemble those of a typical year.
October’s gain followed a 1.5% increase in September, when existing-home sales reached 4.06 million, the highest level in seven months at the time. Taken together, the back-to-back monthly increases suggest that lower mortgage rates are starting to loosen, but not fully break, the logjam that has gripped the housing market for nearly three years.
Prices And Inventory Continue To Climb
The national median sales price for an existing home climbed to $415,200 in October, up 2.1% from a year earlier and the highest level ever recorded for any October in data going back to 1999. Home prices have now registered year-over-year gains for 28 consecutive months, reflecting a persistent shortage of properties for sale and strong demand from buyers who can still afford current borrowing costs.
Inventory has improved but remains tight by historical standards. NAR reported 1.52 million unsold homes on the market at the end of October, essentially flat from September but up 10.9% from a year earlier. That translates to about 4.4 months of supply at the current sales pace, compared with roughly 2 million homes and a more comfortable level of inventory before the COVID-19 pandemic. “To the degree pre-Covid conditions were more normal, we are still tight on inventory,” said Lawrence Yun, NAR’s chief economist.
First-time buyers, a key barometer of market health, accounted for about 32% of October sales, up from 27% a year earlier though still short of the roughly 40% share that economists view as typical in a balanced market. All-cash purchases made up 29% of deals, highlighting how investors and wealthier buyers remain active even as many households struggle with affordability.
Mortgage Rates Ease But Affordability Squeezed
Much of October’s sales momentum stems from a retreat in mortgage costs after the Federal Reserve began cutting interest rates this year. Contracts signed in August and September, when the average 30-year fixed mortgage rate ranged between 6.63% and 6.26%, are now showing up as closed sales. The slide accelerated in October, pulling the average rate down to about 6.17%, the lowest level since Oct. 3, 2024, before edging higher again in recent weeks.
Despite the improvement, borrowing costs remain elevated compared with the sub-3% rates many owners locked in earlier in the decade. Combined with years of rapid price growth, those higher rates continue to sideline many would-be buyers and discourage current homeowners from listing properties, since selling often means giving up an ultra-low mortgage for a much higher one.
Economists note that unemployment has ticked higher and consumer confidence has softened, further weighing on demand. Surveys show a majority of Americans still view this as a bad time to buy a home, citing concerns about inflation, job security and overall affordability, even as more listings and modestly lower rates provide some relief.
Outlook For 2026 Remains Cautious
Looking ahead, NAR projects only a gradual recovery. Lawrence Yun expects existing-home sales to increase about 14% in 2026, helped by additional declines in mortgage rates and a slow build-up in inventory. That would still leave annual sales below the pre-pandemic average, however, and well short of what he describes as a return to “normal” market conditions.
Yun estimates the market would need roughly 1 million more annual home sales than today’s pace to close the gap with historic norms. For 2025, he anticipates only about 500,000 additional sales, assuming rates continue to drift lower and more owners decide to put homes on the market. Until that happens, analysts say the housing sector is likely to remain in a holding pattern: activity has clearly picked up from last year’s nearly 30-year low in sales, but the combination of high prices, relatively expensive financing and uncertain economic conditions is keeping the recovery muted rather than robust.
