Willow and Hearth

The typical American household got a little more breathing room in the housing market last month. The National Association of Realtors reported that its Housing Affordability Index climbed to 104.7 in August, up from 101.2 a year earlier, even as existing-home sales slipped 2.0% from July to a seasonally adjusted annual rate of 3.98 million.

An index reading above 100 means a household earning the national median income has more than enough to qualify for a mortgage on a median-priced home under standard lending guidelines, according to NAR’s own methodology. A year ago, that same household was sitting right at the edge of qualifying. Now there’s a small cushion, the first meaningful one buyers have had in a while.

Key Points

• NAR’s Housing Affordability Index rose to 104.7 in August 2026, up from 101.2 in August 2025.
• Existing-home sales fell 2.0% month-over-month to a 3.98 million annual rate, down 1.2% from a year ago.
• The median existing-home price hit $429,100, up 1.6% annually — the 38th straight month of year-over-year price gains.
• Total inventory rose to 1.62 million units, a 4.9-month supply, the highest level in more than a decade.
• First-time buyers accounted for 30% of August sales, up from 29% in July.

NAR chief economist Lawrence Yun said mortgage rates and home sales move in opposite directions, so it isn’t surprising to see a mild dip in buying activity given where rates currently sit — the 30-year fixed averaged 6.67% in August, up from 6.54% in July. Yun added that the swelling inventory is giving buyers more room to negotiate, a dynamic that’s been largely absent from this market for years.

That combination — slightly higher rates cooling sales, while a fatter housing supply and slower price growth quietly improve affordability — is a real shift from the pattern of the past few years, when buyers watched both prices and rates climb at once. Regionally, affordability improved the most in the West (up 5.9%) and South (up 4.5%), while the Northeast saw a smaller 0.5% gain, per NAR’s regional breakdown.

Inventory is doing a lot of the work here. A 4.9-month supply is still below the six months economists generally consider a balanced market, but it’s the healthiest reading since before the pandemic-era shortage set in, giving buyers who’ve spent years getting outbid a longer runway and more negotiating leverage on price and concessions.

None of this amounts to a return to pre-2020 affordability, and a month-over-month sales dip is still a dip. But for households who’ve spent the past few years watching the math get worse every time they checked, an affordability index moving in the right direction, even modestly, is the first real signal that the ground might be shifting back in their favor.