Home sales picked up last month as lower mortgage rates and higher inventory brought some buyers off the sidelines.

Existing home sales rose 1.5% in September to a seasonally adjusted annual rate of 4.06 million, the highest level since February, according to National Association of Realtors data released Thursday. Year over year, they’re up 4.1%.

Homes that sold in September usually went under contract a month or two earlier. During that period, mortgage rates dropped from around 6.7% to around 6.3%. Current lower rates may bode well for the future of the market, which remains slow by historical standards.

Learn more: How do historical mortgage rates compare to today's rates?

“Certainly mortgage rates could potentially help provide more stimulus for homebuying activity, but at the same time, we have a government shutdown which is causing a little friction,” said Lawrence Yun, chief economist at the National Association of Realtors.

Inventory continued to climb, giving buyers more to choose from. There were 1.55 million homes for sale in September, up 14% from a year earlier and 1.3% from August.

Many of the recent gains have come from sales at the higher end of the market as wealthier Americans continue to benefit from stock market gains. Sales of homes over $1 million jumped 20% from a year earlier, followed by the $750,000 to $999,999 category, which rose 14.4%.

Gains were slower at lower price points. First-time homebuyers, who frequently purchase lower-priced homes, made up 30% of sales in September, up slightly from recent months but still far lower than historical averages, which are in the high 30% to low 40% range.

“Thirty percent still implies that first-time buyers are struggling to get into the market,” Yun said.

Learn more: How to buy a house as a first-time homebuyer in 2025

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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