Sales of previously owned homes in the United States experienced a decline in October, indicating a continuing trend of a tight housing market. According to the National Association of Realtors, sales were 4.1% lower compared to September, with a seasonally adjusted annualized rate of 3.79 million units. This marked the slowest pace of sales since August 2010, falling short of analysts’ expectations of 3.9 million units. Year-over-year, sales were down by 14.6%.
The persistently low inventory of available housing options and the surge in mortgage rates have posed challenges for prospective home buyers. Lawrence Yun, the chief economist at the NAR, acknowledged the struggles faced by buyers due to the lack of housing inventory and the highest mortgage rates seen in years. Despite these difficulties, multiple offers are still occurring, particularly for starter and mid-priced homes. However, concessions in pricing have been observed in the upper end of the market.
The limited supply of homes has also driven prices upwards. The median price of an existing home sold in October was $391,800, reflecting a 3.4% increase compared to the previous year. This rise in prices has been consistent for the past four months and has been coupled with a higher percentage of homes selling above their list price, accounting for approximately 28% of sales.
While sales declined across various price categories below $750,000, there was an increase in sales of higher-end homes, specifically those priced above $1 million. Yun explained that wealthier buyers tend to either purchase homes without mortgages or possess less sensitivity to monthly rate changes. Additionally, there has been a larger inventory of available homes in the higher-end market segment.
First-time buyers represented 28% of the sales in October, which remained unchanged from the previous year and notably lower than the historical average of 40%. Individual investors purchased 15% of the homes, down from September’s 18% and the previous year’s 16%. All-cash transactions accounted for 29% of sales, indicating a slight increase compared to October 2022.
1. What caused the decline in home sales in October?
The decline in home sales in October can be attributed to the persistent lack of housing inventory and the surge in mortgage rates.
2. Are prices of existing homes increasing?
Yes, the median price of an existing home sold in October increased by 3.4% compared to the previous year.
3. Did sales of higher-end homes experience growth?
Yes, sales of homes priced above $1 million increased by just over 9% from the previous year.
4. What percentage of homes sold above their list price?
About 28% of homes sold above their list price in October.
5. How did first-time buyers contribute to October’s sales?
First-time buyers represented 28% of the sales, which is consistent with the previous year but lower than the historical average of 40%.