WASHINGTON, Nov 12 (Reuters) – U.S. existing home sales fell to their lowest level in more than 16 years in October as rising mortgage rates and flat house prices pushed potential buyers away.
Home sales fell 5.5% last month to a seasonally adjusted annual rate of 3.75 million units, the National Association of Realtors reported Thursday. This is the lowest level since August 2010, when sales were down following the end of the home purchase tax credit. Economists polled by Reuters had forecast housing resales falling to 3.85 million units. Sales plunged 8.8% on an annual basis in October.
Home sales are recorded at the closing of a contract. Last month’s sales likely reflect contracts signed in August and September. The 30-year fixed mortgage rate jumped above 7% in late August, reaching 7.40% in mid-September, for a total of 142 basis points since the United States and Israel attacked Iran in late February, according to data from mortgage finance agency Freddie Mac.
It averaged 7.18% last week, compared to 7.24% the week before.
“Buying a home is tough as mortgage rates hit their highest levels since 2000, except for a single month in 2023,” said Lawrence Yun, NAR’s chief economist.
Sales fell in the South, Midwest and West regions. They remained unchanged in the Northeast.
Existing housing stock increased 1.3% to 1.590 million units. Supply increased by 4.6% compared to a year ago. At October’s sales pace, it would take 5.1 months to exhaust the current inventory of existing homes, the highest since November 2015. That’s up from 4.7 months in September and 4.4 months a year ago.
The median existing home price last month rose 0.4% from a year ago to $421,900, the highest in any October.
First-time buyers accounted for 29% of sales, compared to 31% in September and 32% a year ago. A 40% share in this category is necessary for a robust real estate market.
The median number of days on the market for listed real estate increased to 35, compared to 33 in September and 34 a year earlier. Distressed sales, including foreclosures, remained unchanged at 2%. The share of cash transactions increased to 29%
compared to 27% in September. This was unchanged from a year ago.
Individual investors or buyers of second homes represented 20% of transactions, a figure unchanged from September, but up from 16% a year ago.
(Reporting by Lucia Mutikani; editing by Andrea Ricci)
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