Sales of existing homes fell in October as the market continued to suffer from low availability and high mortgage rates.
Data from the National Association of Realtors published on Tuesday showed that existing home sales fell by 4.1% in October from the previous month, down to a seasonally adjusted rate of 3.79 million. Year-on-year sales tumbled sharply by 14.6%.
"Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation," said NAR chief economist Lawrence Yun. "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."
The Hoya Capital Housing ETF
Total housing inventory at the end of the month was 1.15 million units, up 1.8% from October, but 5.7% lower than the year-ago number (1.22 million). The median existing-home price for all housing types in October was $391,800 up 3.4% from $378,800 in the same month a year ago, with all four U.S. regions posting price increases.
First-time buyers were responsible for 28% of sales in October, up from 27% in September, while property investors or second-home buyers purchased 15% of homes, down from 18% in the previous month.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 7.44% as of Nov. 16, down from 7.5% in the previous week but up from 6.61% at the same point last year.
Sales fell in three of the four regions, with the Midwest unchanged from the previous month. Sales in the Northeast fell 4% over the October period, while month-over-month sales in the South fell by 7.1%, and the West eased 1.4%.
Rising prices, low inventory and high interest rates remained bad news for home buyers, but sellers remained in the money.
"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," Yun added.
"The key question for homebuilders as we move through 2024 will be the extent to which the relative boost to new home sales and single-family construction from lower mortgage rates is offset by an increase in existing home supply," Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics told Benzinga.
"The lack of existing home supply this year has enabled homebuilders to capture market share," he added. "But as the currently huge gap between the prevailing mortgage rate and the rate on outstanding mortgages shrinks, more people will be able to move home without suffering a punitive increase in their mortgage payments."
