Existing-home sales retreated for the ninth straight month in October, and all four major U.S. regions registered month-over-month and year-over-year declines, according to the National Association of REALTORS®’ (NAR) recent existing home sales report.
NAR’s October report found that total existing-home sales decreased 5.9% from September to a seasonally adjusted annual rate of 4.43 million. Year-over-year, sales dropped by 28.4% (down from 6.19 million last year).
Key data points:
- Total housing inventory was 1.22 million units, which was down 0.8% from both September and last year (1.23 million). Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months last year.
- The median existing-home price was $379,100, a gain of 6.6% from last year ($355,700). This marks 128 consecutive months of year-over-year increases, the longest-running streak on record.
- Properties typically remained on the market for 21 days, up from 19 days in September and 18 days last year. Of homes sold, 64% were on the market for less than a month.
- First-time buyers were responsible for 28% of sales, down from 29% in both September 2022 and last year. NAR’s 2022 Profile of Home Buyers and Sellers found that the share of first-time buyers was 26%, the lowest since NAR began tracking the data.
- All-cash sales accounted for 26% of transactions, up from 22% in September and 24% last year.
- Individual investors or second-home buyers purchased 16% of homes in October, up from 15% in September, but down from 17% last year.
- Distressed sales – foreclosures and short sales – represented 1% of sales, down from 2% in September and identical to last year.
Single-family and condo/co-op sales:
- Single-family home sales declined to 3.95 million units, down 6.4% from 4.22 million in September and 28.2% from last year. The median price was $384,900, up 6.2% from October 2021.
- Existing condominium and co-op sales were recorded at 480,000 units in October, down 2% from September and 30.4% from last year. The median price was $331,000, an annual increase of 10.1%.
Regional breakdown:
- Existing-home sales in the Northeast trailed off 6.6% from September to 570,000, a decline of 23.0% from last year. The median price was $408,700, an increase of 8.0% from last year.
- The Midwest retracted 5.3% from the previous month to 1,080,000 sales, falling 25.5% from last year. The median price was $274,500, up 5.9% from last year.
- In the South, sales declined 4.8% from September to 1,980,000, a 27.2% decrease from last year. The median price was $346,300, an increase of 8% from last year.
- Existing-home sales in the West waned 9.1% from September to 800,000, down 37.5% from last year. The median price was $588,400, a 5.3% increase from last year.
NAR Chief Economist Lawrence Yun commented:
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.
“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers. In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%.
“Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle.
“It’s a good thing the job market is still creating jobs, it’s creating a pull to the market. the job creating areas and affordable areas will see some price gain”
Bright MLS Chief Economist Dr. Lisa Sturtevant commented:
“Home sales stalled in October as mortgage rates surpassed 7% and caused both buyers and sellers to hit the brakes. Fourth quarter sales in the U.S. will continue to be sluggish. For the year overall, it is likely that sales will be down 15% or more compared to a year ago, falling below the 5 million mark for the first time in nearly a decade.
“Mortgage rates have fallen sharply, dropping about a half of a percentage point in just one week. However, that decline in rates is not enough to halt the housing market’s slide that began earlier this year. Many prospective buyers are still taking a ‘wait-and-see’ approach to see if rates fall further. But another big constraint on the market is a lack of inventory, with new listings drying up as we head into the winter holidays.
“First-time homebuyers have been hardest hit by the escalation in mortgage rates, with the share of buyers purchasing their first home hitting a four-decade low in 2022. Repeat buyers have been in a much stronger position because they have considerable housing equity to roll into the purchase of a new home. Unfortunately, the actions by the Fed to bring down inflation have had the effect of widening wealth disparities, while existing homeowners continued to gain and new homeowners have been largely shut out of the market.”
Danielle Hale, Chief Economist at realtor.com®, commented:
“Existing home sales weakened further in October, following a sharper pullback in September pending home sales. A summer lull in mortgage rates, from mid June until early August, followed by a sharp spike from August to late October likely accelerated purchasing timelines for some shoppers. Others, who might have continued searching into the fall season, likely had their plans cut short as rising mortgage rates moved the affordability of buying a home out of reach.
“In the weeks ahead, we will see if the latest turn in mortgage rates, a drop to 6.61%, will motivate sidelined shoppers to reconsider buying in the near future. With week-to-week changes in mortgage rates causing $100+ swings in monthly housing costs for a median-priced home, it’s tough to know how to set and stick to a budget. If so, home sales are likely to remain at lower levels, and we’ll see home price deceleration in the months ahead.
“In September, the median home sales price remained higher than one year ago, but again, the pace of growth dipped. In a rising housing cost environment, affordable areas in the Midwest and Northeast are at an advantage. The Realtor.com October Hottest Markets Report shows that these lower-cost regions are home to real estate markets that remain relatively active.
“At the same time, the pace of housing cost increases may cool as the greater availability of homes for sale helps rein in home price growth. In the Realtor.com Weekly Housing Trends View, we’ve seen the number of actively for-sale homes continue to climb each week into mid-November, causing a slowdown in median list price growth. Meanwhile, the Realtor.com October Rental Report shows a similar slowdown in rent growth as households seek affordability and landlords rethink pricing strategies. The end to seemingly relentless and inescapable shelter inflation for both renters and home buyers may be on the horizon.”
For the full report, click here.
