U.S. existing home sales fall to 16-year low as mortgage rates squeeze demand
Higher borrowing costs and still-elevated home prices are pushing more U.S. buyers out of the resale market in October. The slowdown leaves existing home sales at their weakest level since 2010 and adds to pressure on a housing sector already constrained by affordability challenges.
Highlights
- Existing home sales declined 5.5% in October to a 3.75 million annual pace, the lowest since August 2010, missing forecasts.
- Inventory grew 1.3% to 1.590 million units, pushing supply to 5.1 months—the highest level since November 2015—amid tight affordability.
- The median existing home price hit a record October high at $421,900, while first-time buyers' market share dropped to 29%.
October sales decline deepens housing slowdown
As reported by Reuters, citing the National Association of Realtors, existing home sales fall 5.5% in October to a seasonally adjusted annual rate of 3.75 million units, below economists' forecast for a 3.85 million unit pace. The reading marks the lowest level since August 2010, while sales are down 8.8% from a year earlier.Because home sales are counted at the closing of a contract, October's figures likely reflect agreements signed in August and September. During that period, the 30-year fixed mortgage rate moves above 7% in late August and reaches 7.40% by mid-September, according to Freddie Mac data, before averaging 7.18% last week.
Lawrence Yun, the NAR's chief economist, says home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023. Regionally, sales fall in the South, Midwest and West, while they are unchanged in the Northeast.
Inventory rises but affordability remains strained
Existing housing inventory increases 1.3% to 1.590 million units in October, up 4.6% from a year earlier. At the current sales pace, it would take 5.1 months to exhaust supply, the highest level since November 2015, compared with 4.7 months in September and 4.4 months a year earlier.The median existing home price rises 0.4% from a year ago to $421,900, the highest level ever recorded for October. First-time buyers account for 29% of sales, down from 31% in September and 32% a year earlier, well below the 40% share seen as consistent with a robust housing market.
The median number of days properties remain on the market increases to 35 from 33 in September. Cash transactions rise to 29% from 27% in the prior month, distressed sales hold at 2%, and individual investors or second-home buyers represent 20% of transactions, unchanged from September but above 16% a year earlier.
As a reminder, our earlier coverage of the UBS rate outlook described expectations for Fed hikes extending into 2027.
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