Contract closings increased 1.5% to an annual rate of 4.06 million in September, the highest in seven months, according to National Association of Realtors figures released Thursday. That matched the median estimate of economists surveyed by Bloomberg.

The median sales price climbed 2.1% from a year ago to $415,200, continuing a run of annual price gains stretching back to mid-2023. Year-over-year price growth averaged well over 4% in 2024.

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"As anticipated, falling mortgage rates are lifting home sales," NAR Chief Economist Lawrence Yun said in a statement. "Home prices continue to rise in most parts of the country, further contributing to overall household wealth."

Last month's improved sales built on the flicker of momentum that started across both the existing- and new-home markets in August. Mortgage rates started falling then and continued to decline in September. The latest drop may bode well for sales in the coming months as homes typically go under contract a month or two before they're sold.

"Demand is beginning to stir" as homes get slightly more affordable and buyers and sellers on the margin come back into the market, according to a blog post earlier this month from Odeta Kushi, an economist at title insurance giant First American Financial Corp.

However, any rebound is expected to be slow. Despite their recent dip, rates are almost double what they were at the end of 2021, and the Mortgage Bankers Association sees them holding at 6.4% through the end of next year. And despite the advance, sales have been stuck around a 4 million pace for the better part of the past three years, hitting some of the weakest levels since the Great Recession.

One positive sign, especially for buyers, has been the increase in homes on the market. Last month, the supply of previously owned homes for sale surged 14% from a year ago to 1.55 million, one of the highest levels since before the pandemic.

Existing-home sales rose in three of four regions, with closings in the South and West rising to the fastest paces since earlier this year. First-time homebuyers accounted for 30% of closings, compared with 28% in the prior month.This is a modal window.

Last month, individual investors or second-home buyers bought 15% of homes, compared with 21% a month earlier. That "volatility" could be because investors are anticipating a downshift in rental prices going forward, Yun said on a call with reporters.

NAR will give another look at September's previously owned home market on Wednesday with the release of its pending sales report, often seen as a leading indicator of actual sales as it reflects contract signings. Friday's scheduled report on September new-home sales from the Census Bureau will likely be delayed due to the government shutdown.

Given the absence of federal data, Yun said NAR staff looked through sales databases to extract the new-homes figure, which he said increased 11.2% last month from a year ago.