U.S. existing home sales dropped in August to their slowest annual pace in over a year, as buyers faced challenges from rising mortgage rates and high home prices. According to the National Association of Realtors, sales of previously occupied homes fell 2% compared to July, reaching a seasonally adjusted annual rate of 3.98 million units. This marks the third consecutive monthly decline. Sales also dropped 1.2% compared to August 2025. The number is just below the 4 million annual pace that economists had anticipated. Since 2023, home sales have largely remained near the 4-million mark, significantly below the historical average of around 5.2 million. The last time annual sales fell below 4 million was in June 2025. Despite the recent decline, existing home sales for the first eight months of this year are up 1.6% compared to the same period in 2025, according to the NAR. The housing market has been affected largely by increasing borrowing costs. Mortgage rates have risen in recent months, partly due to the ongoing conflict between the U.S. and Iran, which has raised concerns about higher inflation and oil prices. These factors have pushed up long-term bond yields, which lenders use as a benchmark for setting mortgage rates. The average rate on the 30-year fixed mortgage reached 6.71% last week, its highest level in over a year. Even though home sales have slowed, prices have continued to rise. The U.S. median sales price climbed 1.6% in August compared to the same month in 2025, reaching $429,100—an all-time high for August based on data dating back to 1999. This marks the 38th consecutive month of year-over-year price increases. The combination of high demand and limited supply has kept prices on an upward trend, despite the challenges posed by rising borrowing costs. Homebuyers are finding themselves in a difficult position, with fewer options available and higher costs to purchase a home.