Sales of previously owned homes remained flat in August at 4 million units on a seasonally adjusted, annualized basis, a 0.2% drop from July but a 1.8% increase from the previous year. The Midwest saw the strongest sales while the Northeast lagged behind. The upper end of the market is performing better than the lower end, with sales of homes priced above $1 million increasing by 8% year over year.

Although mortgage rates dropped sharply at the start of September, the August numbers were based on closings from June and July when rates were higher. Lack of inventory is constraining sales of affordable homes, prompting current homeowners to trade up. The Midwest region had the best performance in August due to affordable market conditions.

Supply in the housing market decreased by 1.3% last month, the first monthly drop this year, although it remains up 11.7% from the previous year. Sellers are holding off listing due to weaker prices and higher mortgage rates, resulting in a lean 4.6-month supply of homes for sale in August. Median home prices rose to $422,600, marking the 26th consecutive month of annual price gains.

Homes are staying on the market longer, averaging 31 days in August compared to 26 days the previous year. The share of first-time buyers is at a historical low of 28%, while all-cash buyers represent 28% of sales, up from 26% the previous year.

Read more at CNBC: Existing home sales stall in August amid higher mortgage rates