CMRE Market Update: Inventory Rises, Sales Dip as Rates Climb

The mortgage and real estate landscape is buzzing with dynamic shifts, and here at CMRE, we're tracking every turn to keep you informed. Recent data paints a picture of a market in flux: while home sales have taken a slight step back, a welcome surge in inventory is offering buyers more breathing room. However, elevated mortgage rates continue to shape borrowing behavior, leading to notable trends in application activity.

Home Sales Dip, Inventory Builds: A Buyer's Opportunity?

For the first time since June 2025, existing-home sales in August 2026 dipped below the 4 million annualized pace, settling at 3.98 million units. This 2.0% decline from July comes as no surprise, with NAR Chief Economist Lawrence Yun noting the inverse relationship between mortgage rates and home sales. Despite the dip, year-to-date sales remain slightly ahead, buoyed by consistent wage growth and job creation.

But the real headline for prospective buyers is the substantial increase in housing inventory. Total housing inventory swelled to 1.62 million units in August 2026, representing a 3.2% increase from July and a significant 5.9% jump from a year ago. This marks the first time since November 2019 that inventory has surpassed 1.6 million units, pushing the market to a 4.9-month supply – its highest level in over a decade. This growing supply means more options and potentially greater negotiation power for buyers.

Even with more homes on the market, prices continue their upward trajectory, albeit at a modest pace. The median existing-home price reached $429,100 in August 2026, a 1.6% increase from August 2025. This marks the 38th consecutive month of year-over-year price appreciation, underscoring persistent demand.

Mortgage Rates Keep Pace, Refinance Demand Cools

Mortgage rates have been a dominant force in the market, with the 30-year fixed rate climbing to 6.85% for the week ending September 4, 2026. This is the highest level since June 2025, driven by ongoing investor concerns over inflation and the federal budget deficit. The impact is clearly visible in mortgage application activity.

Total application volume saw a 2.7% decrease for the week ending September 4, largely due to a sharp pullback in refinancing. The Refinance Index fell 6% from the previous week, hitting its slowest weekly pace since May 2025 and sitting 25% below year-ago levels. This trend was already in motion even before the most recent rate spikes, indicating a sustained cooling in refi demand.

In contrast, purchase application demand has shown more resilience. While dipping slightly by 0.2% for the week ending September 4, purchase activity remained 4% higher than the same week one year ago. This relative stability suggests that serious buyers are still navigating the market, adapting to the higher cost of borrowing.

One clear adaptation strategy is the increasing appeal of Adjustable-Rate Mortgages (ARMs). For the week ending August 28, 2026, the ARM share of activity climbed to 8.0%, its highest level in five weeks. This is likely fueled by a more attractive average rate for a 5/1 ARM, which stood at 5.94% during that period.

What This Means for You

For CMRE clients, these trends present both challenges and opportunities. While higher rates make borrowing more expensive, the growing inventory offers a welcome chance to find the right home with potentially less competition. Understanding the nuances of fixed-rate versus adjustable-rate mortgages is more critical than ever.

Stay tuned to CMRE for continued insights and expert guidance as the market evolves. Your path to homeownership or real estate investment starts with informed decisions, and we're here to help you every step of the way.