Housing News

Lower Mortgage Rates Drive Big Increase in Existing Home Sales

Mortgage interest rates have been on the decline and it’s contributing to an increase in home sales.

Existing home sales rose by 5.1% in December over November’s total, according to a new report from the National Association of Realtors. Sales were up 1.4% year-over-year. (Existing homes exclude new construction.)

The increase was seen in all areas of the country.

Home prices also rose, albeit slightly, in December. The median sales price for an existing home was $405,400, up 0.4% from one year ago when it was $403,700.

“2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” said NAR Chief Economist Lawrence Yun in a statement. “However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth.”

Mortgage rates fell in December, culminating in the lowest interest rates of 2025 in the last week of the year. They averaged 6.15% for 30-year, fixed-rate loans in the week ending Dec. 31, according to Freddie Mac data.

This helped drive more buyers into the market, making December’s home sales the “strongest in nearly three years,” according to Yun.

However, there were fewer homes on the market in December. The number of homes for sale was down 18.1% from November, but was still up 3.5% from December 2024.

And more homes are expected to hit the market soon.

“[Housing] inventory levels remain tight,” Yun said. "With fewer sellers feeling eager to move, homeowners are taking their time deciding when to list or delist their homes. Similar to past years, more inventory is expected to come to market beginning in February.”

Home sales also rose for new construction.

New home sales rose by 18.7% in October 2025 over the previous year’s total, according to the latest data from the Department of Housing and Urban Development and U.S. Census Bureau.

The government reported the October data in January as the delay was due to the government shutdown.

Interestingly, the sales price for a new home is dropping as homebuilders made price cuts to try to sell off their existing inventory.

The median sales price for a new home in October 2025 was $392,300. That’s 3.3% below the September 2025 price of $405,800, and 8% below the October 2024 price of $426,300.