WASHINGTON: Existing home sales in the United States fell for a ninth consecutive month in October as the 30-year fixed mortgage rate hit a 20-year high and prices remained high, putting homeownership on the property beyond the reach of many Americans.
Sales of existing homes fell 5.9% to a seasonally adjusted annual rate of 4.43 million units last month, the National Association of Realtors said Friday. Apart from the plunge of the initial phase of the COVID-19 pandemic in the spring of 2020, this was the lowest level since December 2011.
Economists polled by Reuters had forecast home sales would fall at a rate of 4.38 million units.
Home resales, which account for a large portion of U.S. home sales, fell 28.4% year-on-year in October. The report follows news on Thursday that single-family home construction and future building permits fell to the lowest levels since May 2020. Housing inventory also fell.
Mortgage rates jumped in response to high inflation, forcing the Federal Reserve to trigger the fastest cycle of interest rate hikes since the 1980s. The 30-year fixed mortgage rate broke through the 7% in October for the first time since 2002, according to data from mortgage finance agency Freddie Mac. The rate averaged 6.61% over the past week.
US New Home Sales Fall in September on Rising Mortgage Rates
Sales of existing homes fell sharply in all four regions.
Despite weaker demand, housing supply remains tight, limiting the slowdown in house price inflation.
The median price of existing homes rose 6.6% from a year earlier to $379,100 in October. It marked 128 consecutive months of year-on-year house price increases, the longest such streak on record. There were 1.22 million already owned homes on the market, down 0.8% from September and a year ago.
At the pace of October sales, it would take 3.3 months to deplete the current inventory of existing homes, compared to 2.4 months a year ago. A four to seven month supply is considered a healthy balance between supply and demand.
Properties generally remained on the market for 21 days last month, compared to 19 days in September. Sixty-four percent of homes sold in October 2022 had been on the market for less than a month.
First-time buyers accounted for 28% of purchases, compared to 29% in September and a year ago. Cash sales accounted for 26% of transactions, compared to 24% a year ago.