Home sales fell for the 9th month

Home sales in the United States declined for the ninth consecutive month in October as rising mortgage rates and high prices pushed buyers out of the market.

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — fell 28.4% in October from a year ago and fell 5.9% from September, according to a National Association of Realtors report released Friday. All regions in the United States saw month-over-month and year-over-year declines.

That continued a slowing trend that began in February and marked the longest streak of declining sales on record, dating back to 1999.

Sales in October were at their weakest level since May 2020, when the housing market stalled during the pandemic. Beyond that, sales last month were the weakest since December 2011.

Still, house prices continued to rise last month. The median home price was $379,100 in October, up 6.6% from a year ago, according to the report. But that’s down from a record high of $413,800 in June. The price increase marks more than a decade of year-over-year monthly gains.

“More potential home buyers are squeezed out of qualifying for mortgages in October as mortgage rates rise,” said Lawrence Yun, NAR’s chief economist. “The impact is greater in expensive areas of the country and in markets that have witnessed significant home price gains in recent years.”

Many homeowners who have recently bought or refinanced into ultra-low mortgage rates are reluctant to sell. That has kept the inventory painfully low.

At the end of October there were 1.22 million units for sale, down less than 1% from both last month and last year, according to reports. At current sales rates, it will take 3.3 months to go through existing inventory, up from 3.1 months in September and 2.4 months last year. But it is still historically low: A balanced market is a supply of 4 to 6 months.

“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added.

While almost a quarter of houses in October were sold above the asking price, houses sitting on the market for more than 120 days saw prices reduced by about 16%.

With fewer buyers shopping for a home, the average time a home stays on the market is getting longer.

Properties are typically on the market for 21 days in October, up from 19 days in September. Pre-pandemic, homes typically sit on the market for close to 30 days. More than half of the homes sold in October were on the market for less than a month.

While prices are still rising year-over-year nationally, the increase is smaller than in recent years with annual home price appreciation up 24% in May 2021.

And some markets are even seeing prices drop, particularly areas that have seen increased home price appreciation during the pandemic, Yun said.

Half of the country can expect to see year-over-year price declines in the coming months, Yun said, mostly by modest amounts, while other regions will see larger declines. But the other half will likely see a modest increase.

“Affordable areas will hold, places like Indianapolis, where there is job growth,” he said.

Still, Yun said, nationally, home prices are 40% higher than in October 2019, before the pandemic.

“Household income is not up 40%,” he said.

Struggling first-time home buyers continue to close, accounting for just 28% of transactions last month.

“First-time buyers are really struggling with high prices, a high bar to enter the market and high mortgage rates.”

Once the barriers to homeownership increase a little for buyers – either with falling prices or lower mortgage rates – we may again face a housing shortage, Yun said, because the number of fresh listings coming to the market is now lower than a year ago.

Current home owners are not selling and home builders are also delaying home construction.

October housing starts, a measure of new home construction, were down 4.2% from September, and down 8.8% from a year ago, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

“This is why more new home construction is needed, as well as more rehabilitation of unused buildings into residential units,” Yun said, noting that while apartment building construction remains strong, single-family starts are lower than a year ago and historically lower. average.

“In the meantime, mortgage rates fall from peak levels last month and the gates are opening for more homebuyers to qualify for mortgages.

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