Sales of previously owned homes in the United States experienced a significant decline in October, marking the largest decrease in nearly a year. This decline highlights the ongoing challenges posed by elevated mortgage rates and persistently high prices in the resale market. According to data from the National Association of Realtors (NAR), contract closings decreased by 4.1% from the previous month, resulting in a 3.79 million annualized pace – the lowest since 2010.
One notable factor contributing to the slowdown in the housing market is the combination of soaring mortgage rates and stubborn prices, which has been discouraging both buyers and sellers. However, there is a glimmer of hope as mortgage rates have started to retreat as the Federal Reserve approaches the end of its tightening cycle. This development is fostering buying interest and may indicate that the housing market is reaching its bottom.
Lawrence Yun, the chief economist at NAR, stated that he expects housing inventory to improve after the winter season and heading into the spring. This improvement is likely to be driven, in part, by the recent decline in mortgage rates. Yun also mentioned that a significant number of homes continue to sell above their list price, suggesting that multiple offers are still prevalent, especially in the starter and mid-priced home segments.
Although the number of homes for sale saw a slight increase from the previous month, reaching 1.15 million, it remains the lowest for any October in the series. With the current sales pace, it would take approximately 3.6 months to sell all the properties on the market. Realtors typically consider a market with less than five months of supply as tight.
Interestingly, the NAR’s report revealed that 66% of the homes sold in October were on the market for less than a month. On average, properties remained on the market for 23 days, slightly longer than in September. Existing-home sales constitute the majority of the US housing market and are calculated when a contract is closed. Data on new-home sales, which make up the remaining portion and are based on contract signings, will be released next week.
Q: What led to the decline in home sales in October?
A: The decline in home sales in October can be attributed to elevated mortgage rates and high prices in the resale market.
Q: Is there any hope for the housing market to recover?
A: Yes, there is hope for the housing market as mortgage rates have started to retreat and may indicate a bottoming out of the market.
Q: Are multiple offers still occurring in the housing market?
A: Yes, multiple offers are still happening, particularly in the starter and mid-priced home segments.
Q: How long does it take to sell all the properties currently on the market?
A: At the current sales pace, it would take approximately 3.6 months to sell all the properties on the market.
Q: What is the significance of homes selling below five months of supply?
A: Realtors consider a market with less than five months of supply as indicative of a tight market.