The housing and mortgage markets remain in a persistent standoff as elevated borrowing costs continue to sideline prospective buyers and sellers alike. In the latest market updates, existing home sales hovered near multi-year lows while mortgage contract rates pushed up to multi-year highs, prompting home shoppers to adapt by turning to alternative loan products.
Existing Home Sales: Still Treading Water Near 4 Million
According to the National Association of REALTORS® (NAR), existing-home sales edged up 1.5% in September to a seasonally adjusted annual rate (SAAR) of 3.99 million units. While that represents a minor uptick from August, sales volumes remain stuck near the cyclical floor around 4.0 million units established in late 2023.
August and September proved to be the slowest sales months of the year, driven largely by affordability pressures. Higher borrowing costs limited the pool of qualified buyers, as the Freddie Mac 30-year fixed rate averaged 6.86% in September, up from 6.67% in August and 6.35% a year earlier.
There was, however, a silver lining for active buyers: housing inventory climbed to 1.60 million units, representing a 1.9% monthly increase and a 4.6% rise year over year. Homes are also taking slightly longer to sell, with median days on market rising to 33 days from 31 days in August. This added inventory and longer marketing timeline are beginning to grant buyers greater room to negotiate concessions and price adjustments.
Mortgage Applications Squeezed as Rates Reach 7.50%
Application volume has reflected these affordability hurdles. The Mortgage Bankers Association (MBA) reported that total mortgage application volume fell 2.7% for the week ending October 9, closely following a 6% decline two weeks prior.
The benchmark 30-year fixed rate reached 7.50% with 0.83 points according to the MBA's survey, matching its highest level since November 2023. Purchase application volume slipped 4% over the week and sat 16% below year-ago levels, while refinance applications slipped 0.4% to remain 56% lower than the same period last year.
Buyers Pivot to Adjustable-Rate Mortgages (ARMs)
With fixed borrowing costs remaining elevated, home shoppers have increasingly looked for ways to reduce their monthly mortgage payments. The MBA noted that adjustable-rate mortgages (ARMs) accounted for 10.5% of all loan applications for the week ending October 9, up from 10.3% two weeks prior. This marks the highest ARM market share since October 2025.
With 5/1 ARM rates averaging 6.54%—nearly 100 basis points below the 30-year fixed rate—borrowers are utilizing hybrid structures to bridge near-term affordability gaps.
Looking ahead, market participants should keep a close eye on upcoming weekly mortgage application releases. Because mortgage interest rates pulled back noticeably after October 9, upcoming application data will provide a clear gauge of whether rate dips can revive purchase and refinance momentum.