Sales of existing homes in the United States slipped more than anticipated in October to a new 13-year low, according to industry data released Tuesday, on stubbornly low inventory and high mortgage rates.
Existing home sales fell last month by 4.1 percent to an annual rate of 3.79 million, seasonally adjusted, said the National Association of Realtors (NAR).
The rate was slowest since August 2010, NAR chief economist Lawrence Yun told reporters in a briefing, and compared with a year ago, sales were down 14.6 percent.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” Yun added in a statement.
He noted that available supply of homes is nearly half of what it was during pre-Covid times.
“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” he said.
The NAR estimates that a typical homeowner has accumulated more than $100,000 in housing wealth in the past three years.
In October, the median price of an existing home was $391,800, up 3.4 percent from the same month last year.
Yun added in a press call that if sales worsen more, “we could actually be on track for the lowest home sales in 30 years.”
For now, analysts say there is a large gap between the average interest rate on outstanding mortgages, which are around four percent, and the prevailing mortgage rate of over seven percent last week.
This is “constraining discretionary listings of existing homes, because people can’t afford to move,” said Pantheon Macroeconomics in a recent report.
Homebuilders are also pulling back construction due to weakness in mortgage applications, the analysts added.
As mortgage rates start to fall next year and as the US central bank starts to signal rate cuts, “we expect existing home supply to rise meaningfully, driving down prices,” Pantheon Macroeconomics said.
Sales of existing homes form the majority of the US market.
