4% compared to September. This decline is largely attributed to higher mortgage rates, as well as a diminishing inventory of available homes.
For October, NAR reported a seasonally adjusted annual rate (SAAR) of 5.22 million, down from September's revised reading of 5.39 million. This marks the third consecutive month of declines, and is 1.9% lower than October 2018.
The median existing home price for all housing types was up 3% compared to October 2018, reaching $272,100. Meanwhile, the unsold inventory of homes currently on the market fell to a 3.9-month supply at the current sales rate, indicating that the US real estate market is still quite tight despite a recent surge of new builds. NAR's chief economist, Lawrence Yun, acknowledges the difficulty this presents for many homebuyers:
"With the ongoing decline in mortgage rates and steady employment growth, buyer demand remains strong, but the inability to find available properties for sale continues to drive up prices and limit overall activity," said Yun.
Looking ahead, NAR expects existing home sales to remain soft in the coming months due to a lack of available inventory. First-time buyers may be further hindered by the fact that starter homes are becoming increasingly scarce, with new builds generally targeting higher-end buyers.
At the same time, higher mortgage rates may also be contributing to this sluggishness. The average 30-year fixed rate mortgage has seen an increase over the past few months, leading to decreased affordability for many prospective buyers.
In summary, existing home sales in the US dropped sharply in October due to rising mortgage rates and diminishing inventories of available homes. Despite a year-over-year increase in the median home price, a shortage of starter homes and higher mortgage rates have made it difficult for first-time buyers to enter the market. As a result, NAR predicts existing home sales will remain soft in the near future as buyers struggle to find affordable properties.
This article was contributed on Oct 29, 2023
