File - Home sale signs are posted along Topanga Canyon road in Los Angeles on Oct. 19, 2023. On Tuesday, the National Association of Realtors on reports on existing home sales for October. (AP Photo/Richard Vogel, File)
LOS ANGELES (AP) – Sales of previously occupied U.S. homes slumped in October to their slowest pace in more than 13 years as surging mortgage rates and rising prices kept many prospective homebuyers on the sidelines.
Existing home sales fell 4.1% last month from September to a seasonally adjusted annual rate of 3.79 million, the National Association of Realtors said Tuesday. That’s weaker than the 3.90 million sales pace economists were expecting, according to FactSet.
The last time sales slumped this hard was in August 2010, when the housing market was in recovery from a severe crash.
Sales sank 14.6% compared with the same month last year. They have fallen five months in a row, held back by climbing mortgage rates and a thin supply of properties on the market.
Despite the decline in sales, home prices keep climbing compared with this time last year. The national median sales price rose 3.4% from October last year to $391,800.
“Lack of inventory along with higher mortgage rates (are) really hindering home sales,” said Lawrence Yun, the NAR’s chief economist.
The weekly average rate on a 30-year mortgage hovered above 7% in September, when many of the home sales that were finalized in October would have gone under contract. It has remained above that threshold since, surging in late October to 7.79%, the highest average on records going back to late 2000, according to mortgage buyer Freddie Mac. Last week, the rate averaged 7.44%.
High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who locked in far lower rates two years ago, when they were around 3%, from selling.
Despite the pullback in sales, homebuyers still had to navigate a competitive market due to the chronic shortage of homes for sale, especially the most affordable homes.
Homes sold last month typically within just 23 days after hitting the market, and about 28% of properties sold for more than their list price, a sign that many homes are still receiving multiple offers, the NAR said.
All told, there were 1.15 million homes on the market by the end of last month, up 1.8% from September, but down 5.7% from October last year, the NAR said. That amounts to just a 3.6-month supply, going by the current sales pace. In a more balanced market between buyers and sellers, there is a 4- to 5-month supply.
