U.S. home sales fell for the ninth straight month in October as soaring mortgage rates and high prices pushed buyers out of the market.
Sales of existing homes — which include single-family homes, townhouses, condominiums and co-ops — were down 28.4% in October from a year ago and 5.9% from September , according to a National Association of Realtors report released Friday. All regions of the United States recorded month-over-month and year-over-year declines.
This continues a slowing trend that began in February and marks the longest streak of declining sales on record, dating back to 1999.
Sales in October were at their lowest level since May 2020, when the housing market was at a standstill during the pandemic shutdowns. Beyond that, sales last month were the weakest since December 2011.
Still, home prices continued to climb last month. The median home price was $379,100 in October, up 6.6% from a year ago, according to the report. But that’s down from June’s record high of $413,800. The price increase marks more than a decade of year-over-year monthly gains.
“More potential buyers were squeezed out of qualifying for a mortgage in October as mortgage rates climbed higher,” said Lawrence Yun, chief economist at NAR. “The impact is greatest in expensive parts of the country and in markets that have seen significant house price increases in recent years.”
Many homeowners who have recently purchased or refinanced at ultra-low mortgage rates are hesitant to sell. This kept inventory painfully low.
At the end of October, there were 1.22 million units for sale, down less than 1% from last month and last year, according to the report. At the current rate of sales, it would take 3.3 months to go through existing inventory, compared to 3.1 months in September and 2.4 months last year. But this remains historically low: a balanced market is a supply of 4 to 6 months.
“Inventory levels are still tight, which is why some homes for sale are still getting multiple offers,” Yun added.
While nearly a quarter of homes in October sold above asking price, homes that remained on the market for more than 120 days saw their prices decline by around 16%.
With fewer buyers looking for a home, the average time a home stays on the market is getting longer.
Properties were generally on the market for 21 days in October, compared to 19 days in September. Before the pandemic, homes typically stayed on the market for nearly 30 days. More than half of the homes sold in October had been on the market for less than a month.
While prices continue to rise year over year nationwide, the increase is smaller than it has been in the past two years, the annual price appreciation of homes peaking at 24% in May 2021.
And some markets are even seeing prices fall, especially areas that have seen a huge surge in home price appreciation during the pandemic, Yun said.
Half of the country can expect to see year-on-year price declines in the coming months, Yun said, most will be a modest amount, while other regions will see more declines. important. But the other half will likely see a modest increase.
“Affordable areas will hold, places like Indianapolis, where there’s job growth,” he said.
Still, Yun said, nationwide house prices are 40% higher than in October 2019, before the pandemic.
“Household incomes have not increased by 40%,” he said.
Those struggling to buy their first home continued to be excluded, accounting for just 28% of transactions last month.
“First-time buyers are really struggling with high prices, the high bar for entering the market, and high mortgage rates.”
Once the barrier to homeownership improves a bit for buyers — whether with falling prices or lower mortgage rates — we could once again face a housing shortage, a Yun said, as the number of new listings in the market is lower than a year ago.
Current owners are not selling, and builders are also slowing home construction.
October housing starts, a measure of new home construction, fell 4.2% from September and 8.8% from a year ago, according to the US Census Bureau and the US Department of Housing and Urban Development.
“That’s why more new construction of houses is needed, as well as more rehabilitation of disused buildings into residential units,” Yun said, noting that while apartment building construction remains robust, housing starts in single-family homes are lower than a year ago and much lower than historic. averages.
“Meanwhile, mortgage rates are falling from last month’s highs and the door is opening for more buyers to qualify for a mortgage.”
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