Existing-home sales in October were at a seasonally adjusted annual rate of 3.79 million, a decrease of 4.1% compared with September and down 14.6% compared with October 2022, according to the National Association of Realtors (NAR).
Higher mortgage interest rates and rising home prices were once again the main reasons for the decline. In October, the median existing-home sales price was $391,800, an increase of 3.4% compared with October 2022.
October marked the fourth consecutive month of year-over-year price increases.
The inventory of unsold existing homes grew 1.8% from the previous month to 1.15 million. That’s about a 3.6-months supply at the current monthly sales pace.
Mortgage rates decreased slightly in October, with the average rate for a 30-year fixed-rate mortgage at 7.44% as of November 16. That’s down from 7.50% the previous week but up from 6.61% one year ago.
Among the four major U.S. regions, sales slid in the Northeast, South and West but were unchanged in the Midwest. All four regions experienced year-over-year sales declines.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” says Lawrence Yun, chief economist at NAR, 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.”
“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 adds. “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 2023 and October 2022, according to NAR. Sixty-six percent of homes sold in October were on the market for less than a month.
All-cash sales accounted for 29% of transactions in October, unchanged from September but up from 26% in October 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in October, down from 18% in September and 16% one year ago.
Distressed sales – foreclosures and short sales – represented 2% of sales in October, virtually unchanged from last month and the previous year.
In a separate statement, Selma Hepp, chief economist at CoreLogic, says recent transaction data “suggests that existing home sales are leveling off despite the recent surge in rates.”
“At the same time, existing inventory also appears to have bottomed out and new listings are keeping steady despite the usual seasonal decline,” Hepp says. “Together, the two may suggest that there really is nowhere to go but up in 2024. 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 lackluster 2023.”
Photo: Breno Assis
