October existing-home sales dropped for the ninth month in a row
As rates rose in October, fewer homes were purchased. That’s according to the latest existing-home sales report from the National Association of Realtors® (NAR). Total existing-home sales were down 5.9% from September to October and down a whopping 28.4% from October of last year.
"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher," said Lawrence Yun, Chief Economist at NAR. "The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years."
And that difference between expensive and inexpensive areas of the country was seen in the regional breakdown:
- Northeast: Down 6.6% to an annual rate of 570,000, down 23.0% from October 2021
- Midwest: Down 5.3% to an annual rate of 1,080,000, down 25.5% from October 2021
- South: Down 4.8% to an annual rate of 1,980,000, down 27.2% from October 2021
- West: Down 9.1% with an annual rate of 800,000, down 37.5% from October 2022
Looking at existing-home sales trends
The decrease of existing-home sales seems to be picking up speed after what seemed to be a slowdown in August. But keep in mind that the fall is generally a slow month for home purchases, so this slowdown is not unexpected.
Seasonally Adjusted Annual Rate
Home prices cooling?
The median single-family home price in October was $379,100. This was up 6.6% from a year before, but down from September, which saw prices at $384,800. While still the 128th consecutive month of year-over-year increases, this is down appreciably from the all-time high of $416,000 in June. That’s good news for buyers hoping not to purchase at the top of the market.
One factor keeping prices from cooling even more is that housing inventory is still low. There were 1.22 million units available at the end of October, down from September and October 2021. There is a 3.3-month supply of unsold inventory at the current sales pace. That is actually up from last month and last year, but can be explained by fewer people buying homes right now.
"Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers," said Yun. "In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%."
Reasons to be optimistic
In November, mortgage rates took a dramatic dip, thanks to some good news with inflation and positive signs from the Federal Reserve in regards to their federal funds rate. It will be interesting to see how that changes November’s report when it comes out before the end of the year.
"Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle," Yun notes.