U.S. Existing-Home Sales Fall to Lowest Level Since 2010 as Mortgage Rates Stay Above 7%

Sales of existing homes in the United States fell in October to the lowest level in more than 16 years, as mortgage rates stayed above 7 percent and prices kept rising.

Sales dropped 5.5 percent from September to a seasonally adjusted annual rate of 3.75 million, the National Association of Realtors said on Thursday. That was the slowest pace since August 2010 and 8.8 percent below a year earlier. Economists polled by Reuters had expected a 3.85 million pace.

The average 30-year fixed-rate mortgage was 7.33 percent in October, according to Freddie Mac, up from 6.86 percent in September and 6.25 percent a year earlier. The rate moved above 7 percent in late August and reached 7.40 percent by mid-September, Freddie Mac data showed. It averaged 7.18 percent last week, down from 7.24 percent the week before.

“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” Lawrence Yun, the association’s chief economist, said in the report. “As a result, home sales fell to their lowest level since August 2010.”

Sales fell in three regions, prices rose

Sales fell in the South, the Midwest and the West from September and were flat in the Northeast, the association said. Compared with a year earlier, sales were down in all four regions. The West saw the steepest drop, down 9.7 percent from September and 14.5 percent from a year earlier.

The median price of an existing home was $416,700, up 0.4 percent from a year earlier and the highest for any October, the association said. It was the 40th straight month in which the median price rose from a year earlier. The median price of a single-family home was $421,900.

Inventory rose to 1.59 million homes, up 1.3 percent from September and 4.6 percent from a year earlier. At October’s sales pace, that inventory would last 5.1 months, the most since November 2015.

Fewer first-time buyers

First-time buyers made up 29 percent of sales, down from 31 percent in September and 32 percent a year earlier. Cash buyers made up 29 percent of transactions, up from 27 percent in September, while individual investors or second-home buyers made up 20 percent, up from 16 percent a year earlier. Distressed sales, including foreclosures, were 2 percent of sales.

Homes also took longer to sell. The median time on the market was 35 days, up from 33 days in September and 34 days a year earlier.

Yun said the slow pace of sales, at a time of steady job growth, points to demand that could return if borrowing costs fall. “Based on the current underwhelming home sales pace at a time of consistent job growth, there could be sizable pent-up demand if mortgage rates decline,” he said.

Reporting based on coverage by Reuters and the National Association of Realtors.