October Existing-Home Sales Fall to 16-Year Low as Mortgage Rates Surge

U.S. existing-home sales fell in October to their lowest level in 16 years, as surging mortgage rates prompted would-be buyers to delay purchases.

The National Association of Realtors said Nov. 12 that October existing-home sales came in at a seasonally adjusted annual rate of 3.75 million. A seasonally adjusted annual rate shows what the pace would be if October’s monthly sales continued for a full year. That was down 5.5% from September’s 3.97 million and down 8.8% from a year earlier. The last time the pace was lower was August 2010, as the effects of the Great Recession lingered.

Prices did not fall. The median existing-home price in October was $416,700, up 0.4% from a year earlier and an October record. Sales are shrinking while prices keep rising.

Mortgage rates are the cause. Freddie Mac data put the average 30-year fixed mortgage rate at 7.33% in October, up sharply from 6.86% in September and 6.25% a year earlier. Rates climbed as high as 7.40% on Oct. 8, a three-year high.

Lawrence Yun, chief economist at the National Association of Realtors, said mortgage rates had reached their highest level since 2000 except for one month in 2023, making it harder to buy a home.

October sales reflect contracts signed in August and September that closed in October. In other words, buyers who signed as rates began to rise completed their purchases. The full effect of October’s rate spike may not show up in sales for several more months.

Listings are growing. Homes for sale at the end of October totaled 1.59 million, up 1.3% from a month earlier and 4.6% from a year earlier, the most in seven years. At the current sales pace, that inventory represents 5.1 months of supply, the longest in 11 years. Months of supply measures how long it would take to sell all the homes now listed if no new ones came on the market. A longer supply period means buyers have more homes to choose from.

By region, the West fell the most, down 9.7% from a month earlier, followed by the South at 6.5% and the Midwest at 3.2%. The Northeast was flat. Compared with a year earlier, all four regions declined, with the West down 14.5%, the steepest drop.

First-time buyers made up 29% of sales in October, down from 31% in September. Cash buyers rose to 29% from 27%, as existing homeowners with substantial equity from rising prices paid cash. The housing affordability index stood at 100.7, down from 107.3 a year earlier. The index shows whether a median-income household can afford a median-priced home.

The decline cut across all price ranges. Even the market for homes priced at $1 million or more, which had held up until now, saw sales fall from a year earlier.

For buyers, choices have widened. More listings and fewer transactions mean less competition. But high rates have sharply raised the monthly interest burden, so the real cost remains heavy unless prices come down.

For sellers, homes may take longer to sell. The longest months of supply in 11 years means more homes are sitting unsold.

Rates have eased somewhat. The Freddie Mac weekly survey released Nov. 12 put the 30-year fixed mortgage rate at 7.11%, down for a fourth straight week and off the mid-October peak.

What comes next is still uncertain. Danielle Hale, chief economist at Realtor.com, said sales are likely to stay low for the rest of the year as long as rates remain high. But Yun said employment keeps growing even as sales lag, so pent-up demand could surge all at once if rates fall. The next clue will be the October pending home sales index, due Nov. 18. Pending sales count newly signed contracts, so they show the direction of future transactions first.