Sales for existing homes continued to fall in October, reaching a 13-year low following a period of rising home prices and high mortgage rates, according to a report from the National Association of Realtors (NAR).
Existing-home sales declined 4.1% in October compared to the previous month and 14.6% year-over-year, with only 3.79 million units being sold, according to the NAR. The number of sales was even lower than expectations, at 3.9 million units, and was the lowest number of sales in a month since August 2010, according to CNBC.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” Lawrence Yun, NAR chief economist, said in the release. “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 total number of homes held as inventory increased in October by 1.8% month-over-month but fell 5.7% for the year, reaching 1.15 million, according to the NAR. Existing home prices also increased, rising 3.4% in the month of October year-over-year to $391,800.
The average for a 30-year fixed-rate mortgage remains high at 7.44% as of Nov. 16, after reaching a recent low of just 2.71% in December 2020, according to the Federal Reserve Bank of St. Louis. In October, mortgage rates reached a 23-year high, peaking at 7.9%, following a similar spike in the yield of Treasury bonds.
Mortgage rates and Treasury bonds are facing upward pressure from the Federal Reserve, which has placed its federal funds rate in a range of 5.25% and 5.50%, a 22-year high. The rate was placed at that level to combat inflation, which peaked at 9.1% in June 2022.
Housing affordability has seen a huge decline since the COVID-19 pandemic, pricing many Americans out of the housing market altogether. In August 2023, an average American with a median income could afford a 30-year mortgage on a $356,273 house, compared to December 2020, when that same family could afford a $737,392 house with a mortgage.
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