Pre-owned home sales were down 4.1% in October compared to September, running at a seasonally adjusted annual rate of 3.79 million units, according to the National Association of Realtors.
This was the slowest pace of sales since August 2010. Analysts had expected a smaller drop, to 3.9 million units. Sales were down 14.6% year over year.
The October sales count is based on closings from contracts that may have been signed in August and September. The average rate on the 30-year fixed mortgage had fallen to nearly 7% at the end of August, but then began to rise sharply, jumping over 8% by mid-October. The rates have gone back up a bit since then.
“Homebuyers had another difficult month due to the continued lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, NAR’s chief economist. “However, several offers remain happening, especially on starter and mid-priced homes, even as price reductions are happening at the higher end of the market.”
At the end of October there were 1.15 million homes for sale, down 5.7% from a year earlier. This is around half as many homes as were available for sale pre-Covid. At the current sales pace, that represents a 3.6-month supply. a six-month supply is considered a fair market between buyer and seller.
Tight supply kept pressure down on prices. The median price of a home sold in October was $391,800, an increase of 3.4% from a year ago ($378,800). Prices rose in every region of the country. These annual price increases have been increasing for four months straight. About 28% of homes sold above list price.
“Although conditions for buyers remain tight, home sellers have done well as prices continue to rise year-on-year, including a new all-time high for the month of October, ” Yun said. “In fact, the average homeowner has accumulated more than $100,000 in housing wealth over the past three years.
Sales fell in all price categories up to $750,000, but there was an increase in high-end home sales. Homes priced above $1 million were up just over 9% from a year ago. Wealthier buyers either tend not to use a mortgage or are less sensitive to monthly rate changes. Yun also noted that there are more homes available for sale at the higher end of the market.
First-time buyers represented 28% of sales in October, unchanged from a year ago and still well below the 40% share they have historically represented. Individual investors bought 15% of the homes, down from 18% in September and 16% from a year ago. All-cash deals accounted for 29% of sales, up from 26% in October 2022.
