Existing home prices firmed up in September

Home prices firmed up for the second month in a row in the existing home sales report released Thursday. Demand showed higher year-over-year growth, while inventory growth has slowed down recently.

Several months ago, my model showed that the existing-home sales market should show growth compared to last year, even if sales remained flat at 4 million units. The year-over-year increase from June to October should still be evident in the reports release from July to November. Therefore, today’s year-over-year sales growth, similar to the last few months, should not come as a surprise, as the forward-looking housing data was slightly better this year versus last. But with this report, the year-over-year price growth picked up a tad as well, which might have surprised a few people.

However, unlike in October 2024 when mortgage rates were rising, mortgage rates are currently near 6%. Buyers today have access to adjustable-rate mortgages (ARMs) with rates below 6%, which will be available throughout all of 2026. It’s a very different backdrop today than last year, as the Fed only started cutting rates late last year, and labor data was much better then. Let’s take a closer look at this report.

Total existing-home sales for September

Total existing-home sales for September, From NAR:

• 1.5% increase in existing-home sales month-over-month to a seasonally adjusted annual rate of 4.06 million.
• 4.1% increase in sales year-over-year.

Based on our Housing Market Tracker data, we noticed a slight year-over-year pick-up in demand starting in the May/June period. Our pending contract data takes about 30-60 days to appear in the existing home sales report. By mid-June, I realized our tracker data showed a shift in the supply-and-demand equilibrium, so it wasn’t a surprise when sales grew — we are working from extremely low sales levels.

Inventory in September

• 1.55 million units: Total housing inventory, up 1.3% from August and up 14.0% from September 2024 (1.36 million).
• 4.6-month supply of unsold inventory, no change from August and up from 4.2 months in September 2024.

Housing Inventory looks like it peaked in the NAR data at around 1.55 million, which brings nothing but a smile to my face. My goal for the housing market post-COVID was to have total housing inventory return to 1.52-1.93 million and achieve at least four months of supply; that is a healthy marketplace, and we got that in 2025.

One note here: unlike 2007-2011, even with the third year of the lowest home sales ever, when I adjust to our population from years 2022-2025, the monthly supply data has never broken above 5.0 months, whereas back from 2007-2011 it ranged between 8.3-10.8 months for the existing home sales market.

Home-price growth firmed up for the second month in a row, up 2.1% year over year. Two months ago it was 1%, last month it was 2% and in this report, prices picked up just a tad to 2.1%. For those that read our weekend tracker, we’ve shown how the supply and demand equilibrium has been changing a bit starting in the summer.

Conclusion

It’s not shocking to me that the last four months showed flat to 4.1% year-over-year growth in sales — its been my call from early in the year because, unlike the previous year, the forward-looking housing data wasn’t as negative as it was in the first half of 2024.

All in all, considering what we’ve had to deal with in housing, 2025 is the healthiest year in the housing market post-COVID. Mortgage spreads are better, mortgage rates are lower, inventory is up, price growth has cooled and all the things that were issues before have improved in 2025.