Why Are Home Prices Still Rising Even Though U.S. Home Sales Are Declining?

Recent U.S. housing headlines may seem contradictory.

Home sales are declining, yet home prices are still rising.

According to data released by the National Association of Realtors® on August 11, existing-home sales in the U.S. fell 1.7% in July 2026 from the previous month to an annualized rate of 4.06 million homes. Sales declined for the second consecutive month, and the Midwest also saw a decrease in sales.

The biggest factor is, once again, mortgage rates. According to Freddie Mac, the average 30-year fixed mortgage rate was 6.69% as of August 6, slightly higher than the 6.63% recorded during the same period last year.

But here's the important point:

Fewer home sales do not necessarily mean lower home prices.

The Median Home Price Actually Increased by 2%

The median existing-home sales price in July was $434,100, up 2.0% from the same month last year.

Why did prices rise even though fewer homes were sold?

The answer is relatively simple.

The number of buyers has declined, but the number of sellers has declined as well.

Many homeowners currently have mortgages with rates in the 3%–5% range. Selling their home and taking out a new mortgage at a rate above 6% can be financially difficult.

This is known as the mortgage rate lock-in effect.

As a result, existing-home inventory at the end of July stood at approximately 1.54 million homes, down 1.9% from the previous month and 0.6% from a year earlier.

At the current sales pace, that represents approximately 4.6 months of inventory.

Since roughly five to six months of inventory is often considered a more balanced market, the U.S. housing market as a whole still cannot be described as having an abundance of homes for sale.

Fewer Sales and Falling Prices Are Not the Same Thing

Many buyers ask:

"If homes aren't selling, won't prices eventually fall?"

Not necessarily.

For home prices to decline significantly, the supply of homes for sale generally needs to increase much faster than buyer demand.

Right now, both sides of the market are contracting.

Higher mortgage rates have reduced buyers' purchasing power, while homeowners with low-rate mortgages are also reluctant to sell.

In other words, both demand and supply have weakened.

This dynamic can be especially important in Chicago's suburbs, where desirable school districts, transportation, and quality of life can keep inventory relatively tight.

In areas such as Naperville, Northbrook, Glenview, Buffalo Grove, and Palatine, overall sales may decline while well-maintained, appropriately priced homes can still attract multiple buyers.

At the same time, overpriced homes or properties requiring significant repairs may sit on the market longer and eventually require price reductions.

Today's market is not one where every home is rising or falling at the same rate. The outcome increasingly depends on the individual property.

This Could Actually Create Opportunities for Buyers

When overall sales slow down, some buyers leave the market.

That can mean less competition for the buyers who remain.

A home that might have received multiple offers in the spring could have a more flexible seller by late summer or fall, potentially creating more room to negotiate:

• Purchase price

• Closing costs

• Closing date

• Repairs

• Seller credits

However, waiting for a major price drop on a desirable home can be risky.

If mortgage rates decline even modestly, many buyers who have been waiting on the sidelines could return to the market at the same time.

Instead of trying to predict the exact bottom of the market, buyers should focus on three things:

1. Determine the monthly payment you can comfortably afford at today's rates.

2. Compare current inventory and actual sales prices in your target neighborhood.

3. Look for properties where competition is lower and negotiate on price or seller credits.

Sellers Need to Adjust Their Strategy Too

The fact that the national median price increased does not mean every home can command a higher price.

Today's buyers are dealing with higher monthly mortgage payments, making them much more sensitive to both price and property condition.

Sellers should focus on:

• Pricing based on recent comparable sales

• Making the home show-ready

• Improving photography and presentation

• Understanding current competing listings

Well-priced homes in good condition can still sell quickly.

But homes that are priced incorrectly are increasingly likely to sit on the market.

Right Now, Inventory Matters More Than Sales Volume

The most important takeaway from this latest data is clear:

U.S. home sales are declining, but inventory is declining as well—and that is helping keep home prices relatively strong.

So don't look at a headline about declining home sales and automatically assume a major housing price correction is coming.

Real estate is local.

Neighborhood, price range, school district, property condition, and available inventory can all produce very different outcomes.

If you're planning to buy or sell in Chicago or the surrounding suburbs, don't simply wait for mortgage rates or home prices to fall. Start by looking at the inventory and recent sales data in the specific area you're interested in.

If you'd like to understand what's actually happening in your neighborhood, contact Chicago Bokdeokbang – Sang Han. We can use the latest local data to identify the strategy that makes the most sense for you.