U.S. existing-home sales fell 5.5% in October to a seasonally adjusted annual rate of 3.75 million, the slowest pace since August 2010, according to a report published November 12 by the National Association of Realtors. Sales were 8.8% below their level a year earlier.
The 3.75 million figure is an annualized pace based on homes that closed in October, not the number of homes sold during the month. The National Association of Realtors’ measure covers resales, including single-family homes, townhomes, condominiums and co-ops.
Rates rose in October, then eased slightly
The average rate on a 30-year fixed mortgage was 7.33% in October, up from 6.86% in September and 6.25% a year earlier, the Realtors group reported. Mortgage rates reached 7.4% early in October, their highest level in nearly three years, according to the Associated Press.
By November 12, the weekly average had eased to 7.11%, Freddie Mac reported, down from 7.18% the prior week. The October sales report therefore reflects a month in which borrowing costs rose sharply, not a rate that was still climbing at the time the report appeared.
The group’s chief economist attributed the weak sales pace to elevated mortgage rates. The reporting also cautioned that October closings often stem from contracts signed in August or September, when rates were lower. Mortgage pricing is influenced by bond yields, rather than being set directly by the Federal Reserve.
More homes on the market, but prices still higher
The national median price for an existing home was $416,700 in October, 0.4% higher than a year earlier. It marked the 40th consecutive month with an annual increase in the median price, even as sales declined.
Inventory rose to 1.59 million homes, equivalent to 5.1 months of supply, compared with 4.7 months in September. The figures show that more homes were available while sales weakened, but they do not establish why individual buyers chose to wait or proceed.
The Realtors group’s affordability index fell to 100.7 from 107.3 a year earlier. Together, the price, supply and affordability measures offer a mixed picture: supply increased, but the median price remained higher year over year and the affordability measure declined.
Declines across most regions
Sales were unchanged month over month in the Northeast. They fell 3.2% in the Midwest, 6.5% in the South and 9.7% in the West, according to the report. The West had the largest monthly decline among the four regions.
First-time buyers made up 29% of October sales, down from 32% a year earlier. The Associated Press reported that the share has historically been closer to 40%, citing the Realtors group. Cash purchases accounted for 29% of sales in October.
Mortgage costs were a major pressure identified in the reporting, but the evidence does not establish them as the only reason sales fell. Seasonal conditions and broader economic uncertainty were also raised as possible factors.