Sales of previously occupied U.S. homes fell in October for the ninth consecutive month to the slowest pre-pandemic sales pace in greater than 10 years as homebuyers grappled with sharply higher mortgage rates, rising home prices and fewer properties in the marketplace.
Existing home sales fell 5.9% last month from September to a seasonally adjusted annual rate of 4.43 million, the National Association of Realtors said Friday. The string of monthly sales declines this 12 months is the longest on record going back to 1999, the NAR said.
Sales cratered 28.4% from October last 12 months. Excluding the steep slowdown in sales that occurred in May 2020 near the beginning of the pandemic, sales at the moment are on the slowest annual pace since December 2011, when the housing market was still mired in a deep slump following the foreclosure crisis of the late 2000s.
The story is way the identical within the Puget Sound region. Fewer recent listings hit the market in October than a 12 months ago, and more homes were still lingering in the marketplace at the tip of the month, based on data released earlier in November by the Northwest Multiple Listing Service.
King County saw 38% fewer pending single-family home sales in October than last 12 months, and 34% fewer than at the identical time in 2019, before the pandemic supercharged the market.
Despite the slowdown, home prices continued to climb last month, albeit at a slower pace than earlier this 12 months. The national median home price rose 6.6% in October from a 12 months earlier, to $379,100.
The median home price is down about 8% from its June peak, but stays 40% above October 2019, before the pandemic, said Lawrence Yun, the NAR’s chief economist.
“That’s really hurting affordability,” he said. “Most household incomes haven’t risen by 40%.”
The inventory of homes in the marketplace declined for the third month in a row. Some 1.22 million homes were on the market by the tip of October, down 0.8% from September, the NAR said.
That amounts to three.3 months’ supply at the present pace. In a more balanced market between buyers and sellers, there may be a five- to six-month supply.
The housing market has slowed as U.S. mortgage rates have greater than doubled from a 12 months ago, shrinking the buying power of Americans.
The common rate on a 30-year home loan was 6.61% this week, based on mortgage buyer Freddie Mac. A 12 months ago, the typical rate was 3.1%. Late last month, the typical rate topped 7% for the primary time since 2002.
That may add a whole lot of dollars to monthly mortgage payments, and likewise discourage homeowners who locked in an ultralow rate the last couple of years from buying a recent home. It’s a part of the rationale that there are fewer homes in the marketplace.
Mortgage rates are prone to remain a big hurdle for a while because the Federal Reserve has consistently signaled its intent to maintain raising its short-term rate of interest in its bid to squash the most popular inflation in a long time.
Two weeks ago, the Fed raised its short-term lending rate by one other 0.75 percentage points, thrice its usual margin, for a fourth time this 12 months. Its key rate now stands in a spread of three.75% to 4%.
With the variety of properties in the marketplace scarce, sellers typically receive multiple offers, especially for essentially the most inexpensive homes.
The mixture of upper mortgage rates and rising prices are keeping many first-time buyers on the sidelines. They represented 28% of sales last month, down from 29% in September, the NAR said. By historical standards, first-time buyers typically made up as much as 40% or more of transactions.
“First-time buyers are really struggling in today’s market,” Yun said.
Yun expects home prices will decline about 5% in roughly half the country next 12 months, with metropolitan areas where home values skyrocketed in recent times experiencing the most important declines. That features San Francisco, where prices could fall 15% next 12 months, he said. That said, Yun also forecasts home prices will climb about 5% in Indianapolis and other markets where job growth stays strong and real estate values have risen more modestly.