Elevated mortgage rates and high home prices pushed sales of existing homes down again in October to the lowest monthly pace since August 2010.
Existing-home sales dropped 4.1% in October from the prior month, reaching a seasonally adjusted annual rate of 3.79 million, according to the National Association of Realtors. Compared to October 2022, existing home sales slumped 14.6%, down from 4.44 million.
Looking at the four major U.S. regions on a monthly basis, sales slid in the Northeast, South, and West but were unchanged in the Midwest. On a year-over-year basis, all four regions posted sales declines.
Homes typically go under contract a month or two before the closing, which means the October data largely reflects purchase decisions made in August and September.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” NAR Chief Economist Lawrence Yun said in a statement. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”
On the bright side, housing inventory rose 1.8% from September, with 1.15 million units available. Despite the monthly increase that figure was 5.7% lower than October 2022 when inventory was at 1.22 million. Meanwhile, unsold inventory sat at a 3.6-month supply at the current sales pace, up from 3.4 months in September and 3.3 months in October 2022.
The median existing-home price for all housing types in October was $391,800, down from $394,300 in September but up 3.4% from October 2022’s $378,800. All four U.S. regions registered price increases.
“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”
Selma Happ, the chief economist at CoreLogic, said transaction data suggests that existing home sales are leveling off despite the uptick in mortgage rates. At the same time, existing inventory has likely already bottomed out and new listings are keeping steady despite normal seasonal declines.
“Together, the two may suggest that there really is nowhere to go but up in 2024,” she said. “In addition to existing home sales, and with expected decline in interest rates, homebuilders will have more homes ready for purchase, which, working together, could drive overall home sales higher next year after lackluster 2023.”
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