Pre-owned home sales fell 4.1% in October compared to September, a seasonally adjusted annualized rate of 3.79 million units, according to the National Association of Realtors.
It was the slowest sales pace since August 2010. Analysts had expected a more modest decline, to 3.9 million units. Sales decreased by 14.6% year-on-year.
The October sales count is based on the closings of contracts likely signed in August and September. The average rate for 30-year fixed-rate mortgages had fallen to nearly 7% by the end of August, but then began to rise sharply, surpassing 8% by mid-October. Since then, rates have fallen somewhat.
“Prospective buyers had another tough month due to a continued lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, NAR chief economist. “Many deals continue to be made, however, particularly on starter and mid-priced homes, although price concessions are taking place at the high end of the market.”
At the end of October, 1.15 million homes were for sale, a decrease of 5.7% from the previous year. This is about half the number of homes available for sale pre-Covid. At current sales rates, this represents a 3.6 month supply. a six-month supply is considered a balanced market between buyer and seller.
Tight supply kept pressure on prices. The median price of an existing home sold in October was $391,800, an increase of 3.4% from a year ago ($378,800). Prices have increased in all regions of the country. These annual price increases have been increasing for four consecutive months. About 28% of homes sold above list price.
“Although conditions for buyers remain tight, home sellers have fared well as prices continue to increase year over year, including a new all-time high for the month of October,” he said. Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in real estate wealth over the past three years.”
Sales fell in all price categories up to $750,000, but sales of high-end homes increased. Homes priced above $1 million increased just over 9% from a year ago. Wealthier buyers tend not to use mortgages or are less sensitive to monthly rate changes. Yun also noted that there are more homes available for sale in the high-end segment of the market.
First-time buyers accounted for 28% of October sales, unchanged from a year ago and still significantly lower than the 40% share they historically represented. Individual investors bought 15% of homes, compared to 18% in September and 16% a year ago. All-cash transactions accounted for 29% of sales, up from 26% in October 2022.