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Existing-home sales torpedoed in October to a 13-year low as willing homebuyers recoiled in shock at record-high mortgage rates last month, according to data released Tuesday by the National Association of Realtors.
Existing-home sales fell 4.1 percent in October to a seasonally adjusted annual rate of 3.79 million, the lowest month for sales since August 2010, according to the data. Sales were down 14.6 percent from a year earlier.
“Prospective homebuyers 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.”
The median existing home price for all housing types in October clocked in at $391,800, a 3.4 percent increase from October 2022 when it was $378,800.
Total housing inventory registered at the end of the month was 1.15 million units, up 1.8 percent from September but down 5.7 percent from one year ago, according to NAR data.
While buyers continue to struggle, homesellers have continued to benefit from limited inventory even as mortgage rates continue to hover near 8 percent.
“While circumstances for buyers remain tight, homesellers 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.”
Properties typically remained on the market for 23 days in October, up from 21 days in September. A whopping 66 percent of homes sold in October were on the market for less than a month, according to NAR data. First-time buyers were responsible for 28 percent of sales in October, up from 27 percent in September and identical to October 2022 levels.
Individual investors or second-home buyers made up 15 percent of home sales in October, down from 18 percent in September and 16 percent one year ago.
Some experts suggested that the combination of existing inventory bottoming out and new listings steadily returning to the market could result in an upward trend for home sales in 2024.
“Recent CoreLogic transaction data suggests that existing-home sales are leveling off despite the recent surge in rates,” CoreLogic Chief Economist Selma Hepp said in a statement. “At the same time, existing inventory also appears to have bottomed out and new listings are keeping steady despite the usual seasonal decline.”
Together, the two may suggest that there really is nowhere to go but up in 2024,” Hepp added. “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 a lackluster 2023.”