Welcome back to the CMRE blog, where we dissect the latest real estate and mortgage news to keep you informed. This week, we're seeing a nuanced picture: a notable bounce in new home sales, but persistent headwinds in the broader market driven by elevated mortgage rates.
New Home Sales Find Their Stride
The new home market showed a surprising burst of energy in August, with sales experiencing their fourth biggest rebound in four years. Sales of new single-family homes rose 6.4% from July to a seasonally adjusted annual rate of 684,000. This increase pushes sales back above the 600,000 mark after a slight dip, though the overarching trend remains somewhat flat.
Inventory for new houses held steady at 483,000, leading to a dip in implied supply to 8.5 months from 9.0 months in July. Pricing, however, was a mixed bag. The median sales price edged up 0.4% from July to $393,700, but was 5.8% lower than August 2025. The average sales price fell significantly, down 9.1% from July and 8.8% from a year earlier, landing at $478,700. It's crucial to remember that these price movements don't adjust for changes in home characteristics.
Mortgage Demand: Refis Retreat, Purchases Hold Steady (Barely)
The story for mortgage applications is largely dictated by rates, and with the 30-year fixed rate climbing above 7% last week, demand remained subdued. The Mortgage Bankers Association (MBA) reported a 1.5% decline in total application volume for the week ending September 18, following a 4.1% drop the week prior.
Refinance activity bore the brunt of these higher rates, declining another 3% week-over-week and sitting a staggering 62% lower than a year earlier. This marks the slowest pace for refinancing since February 2025, as few borrowers can benefit from replacing their existing mortgage with today's higher rates.
Purchase activity, while technically down 1% week-over-week, has generally been grinding sideways. The silver lining for some borrowers? The increasing appeal of Adjustable-Rate Mortgages (ARMs). With the 30-year fixed rate hitting 7.12% – its highest since May 2024 – and the average 5/1 ARM rate falling to 6.10%, the significant spread is drawing more attention. ARMs now account for 9.8% of application volume, up from 8.4% the week before, a clear indication of borrowers seeking more affordable initial payments.
Existing Home Sales See Modest Rebound with Regional Divergence
Pending home sales, a forward-looking indicator based on signed contracts for existing homes, offered a glimmer of hope in August. The National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI) increased a modest 0.3% from July, though it was still down 4.7% from a year earlier. Income growth has been outpacing home price growth, but the persistent burden of higher borrowing costs continues to cap any significant improvement in buyer power.
Regionally, the market shows divergence, with gains in the South (+2.3% MoM) and West (+3.0% MoM) offsetting declines in the Northeast (-4.2% MoM) and Midwest (-1.6% MoM). Nationally, pending sales remain roughly 30% below pre-pandemic levels, reinforcing the idea that lower rates are key to unlocking sidelined demand.
What Does This Mean for You?
For CMRE clients, the message is clear: the market is dynamic. While new construction offers some robust activity and potential opportunities, existing home sales face an uphill battle against high rates. If you're considering a home purchase, understanding the interplay between fixed and adjustable rates is more crucial than ever. For those looking to refinance, current conditions are challenging, but exploring all options with a CMRE expert can help clarify your best path forward.