Existing-home sales are stuck near 4 million a year, and the mortgage rate lock-in effect is the main reason. The National Association of Realtors (NAR) reported sales at a seasonally adjusted annual rate of 4.06 million in July 2026, down 1.7% from June but 0.7% above July 2025, with a record median price of $434,100 [1]. Research by the Federal Housing Finance Agency finds that for every percentage point by which market rates exceed a homeowner's existing rate, the probability that the home is sold falls by 18.1% [2]. With the 30-year rate at 6.66% as of August 27, 2026, the gap for owners who financed in 2020 and 2021 remains wide enough to keep millions of homes off the market [3].
Existing-home sales in July 2026: 4.06 million and holding
The July report shows a market that is neither recovering nor deteriorating. The table summarizes NAR's July 2026 release [1].
| Measure, July 2026 | Value | Change |
|---|---|---|
| Existing-home sales (annual rate) | 4.06 million | -1.7% from June; +0.7% from July 2025 |
| Single-family sales | 3.69 million | -1.9% from June; +0.8% year over year |
| Median price, all types | $434,100 | +2.0% year over year, 37th straight gain |
| Inventory | 1.54 million | -1.9% from June; -0.6% year over year |
| Months of supply | 4.6 | Unchanged |
| Median days on market | 29 | Up from 28 |
| First-time buyers | 29% of sales | |
| All-cash sales | 26% of sales |
NAR's chief economist described sales as remarkably stable despite the rise in rates over the preceding months [1]. Zillow's own count, which measures closings differently, showed July sales up 7% from a year earlier at 382,898, but newly pending listings only 0.3% higher and 7.7% below June, which points to weaker closings in August and September [5]. DataPorium's Zillow-based nowcast recorded 379,537 sales in July at a median sale price of $382,000, with 51% of homes selling below list and 30% above [6].
The mortgage rate lock-in effect, quantified
The FHFA working paper, published in March 2024, is the most rigorous estimate of how low existing rates suppress sales. Using loan-level data, its authors found that lock-in prevented 1.33 million sales between the second quarter of 2022 and the fourth quarter of 2023, and that it reduced sales of homes with fixed-rate mortgages by 57% in the final quarter of 2023 [2]. The effect on prices was the opposite of what higher rates alone would do: the supply reduction raised home prices by 5.7%, outweighing the direct effect of higher rates, which lowered them by 3.3% [2]. That is why prices kept rising through 2023 and 2024 even as sales collapsed.
What lock-in costs a mover today
Consider an owner whose home is worth the July median of $434,100 and who wants to move to a similar home with 20% down, borrowing $347,280 [1]. At the August 27 rate of 6.66%, the principal-and-interest payment is about $2,232 a month [3]. Had the same loan been taken at 3%, the payment would be about $1,464; at 4%, about $1,658. The move therefore costs $574 to $768 a month, or $6,900 to $9,200 a year, before any change in house size or location. Owners make that trade only when a job, a family change or a large equity gain forces the issue.
Why sales are stable despite lock-in
- Cash buyers made up 26% of July sales, and individual investors and second-home buyers 14%; neither group cares about the rate gap [1].
- First-time buyers were 29% of sales; they have no existing loan to lock in, although at 6.66% the rate they face is 10 basis points above the 6.56% of a year earlier [1][3].
- Time erodes the effect: each year more owners face life events, and the 2020 and 2021 cohorts have now held their loans for five to six years.
- Inventory at 4.6 months of supply is enough to let sales continue at the current pace without price declines [1].
The rate path in 2026 has not helped. Freddie Mac's survey shows the 30-year rate at 5.98% on February 26, 6.49% on July 9 and 6.66% on August 27, so the spring buying season took place with rates rising rather than falling [3]. Investors may consider that the rate gap, not the price level, is the variable to watch: sales respond to a 50 basis point move in rates far more than to a 2% move in prices.
Sales of 4.06 million a year with a record median price is exactly what the lock-in research predicts: fewer transactions, not lower prices.
Outlook: Fannie Mae expects a slow thaw
Fannie Mae's August 2026 forecast projects existing-home sales of 4.106 million in 2026, up 0.7% from 2025, and 4.267 million in 2027, up 3.9% [4]. The forecast assumes a 30-year rate of 6.7% in the third quarter and 6.8% in the fourth quarter of 2026, easing only to 6.7% on average in 2027, and home price growth of 2.3% in 2026 and 1.0% in 2027 [4]. Purchase mortgage originations are projected at $1.44 trillion in 2026 and refinancing at $728 billion, a 34% refinance share [4]. In other words, the lock-in effect is expected to fade slowly through turnover and income growth rather than to break through a sharp fall in rates.
From a market-oriented view, the healthiest resolution is more supply and steady income growth rather than policy attempts to subsidize rates, which would raise demand into a fixed stock and push prices up. The counterpoint is that the transition is slow and costly for households that need to move now. Metro-level sales, inventory and price series are available on DataPorium's housing market page.
Key takeaways
- Existing-home sales ran at 4.06 million in July 2026, down 1.7% from June and up 0.7% from a year earlier; the median price was a record $434,100 [1].
- FHFA research finds each percentage point of rate gap cuts the chance of a sale by 18.1%, and lock-in prevented 1.33 million sales in 2022 and 2023 [2].
- Moving from a 3% loan to a 6.66% loan on a median home costs about $768 more a month [1][3].
- Cash buyers (26%) and first-time buyers (29%) keep sales stable because the rate gap does not apply to them [1].
- Fannie Mae expects 4.106 million existing-home sales in 2026 and 4.267 million in 2027, with rates near 6.7% to 6.8% [4].
Frequently asked questions
What is the mortgage rate lock-in effect?
It is the reluctance of homeowners with low-rate mortgages to sell and take on a new loan at a higher rate. FHFA research finds the probability of a sale falls 18.1% for every percentage point that market rates exceed the owner's rate [2].
How many existing homes sold in July 2026?
NAR reported a seasonally adjusted annual rate of 4.06 million existing-home sales in July 2026, 1.7% below June and 0.7% above July 2025 [1].
Will existing-home sales recover in 2027?
Fannie Mae's August 2026 forecast expects a modest recovery to 4.267 million sales in 2027 from 4.106 million in 2026, with the 30-year rate averaging about 6.7% [4].
Why are home prices rising if sales are so low?
Because lock-in reduces supply more than higher rates reduce demand. FHFA estimates the supply effect raised prices 5.7% while the direct rate effect lowered them 3.3% [2].
Sources & References
- [1] NAR Existing-Home Sales Report for July 2026 (August 11, 2026)
- [2] FHFA Working Paper 24-03: The Lock-In Effect of Rising Mortgage Rates
- [3] FRED: 30-Year Fixed Rate Mortgage Average in the United States (Freddie Mac PMMS)
- [4] Fannie Mae Economic and Strategic Research: Housing Forecast, August 2026
- [5] Zillow July 2026 Market Report (press release, August 6, 2026)
- [6] DataPorium Housing Market Insights (Zillow-based data by state, metro, city and ZIP)
