US existing home sales tumbled for a ninth straight month in October as the 30-year fixed mortgage rate hit a 20-year high and prices remained elevated, pushing homeownership out of the reach of many Americans.
Existing home sales dropped 5.9 percent to a seasonally adjusted annual rate of 4.43 million units last month, the National Association of Realtors said on Friday. Outside the plunge during the initial phase of the COVID-19 pandemic in early 2020, this was the lowest level since December 2011.
Economists polled by Reuters had forecast home sales would tumble to a rate of 4.38 million units.
House resales, which account for a big chunk of US home sales, slumped 28.4 percent on a year-on-year basis in October. The report followed on the heels of news on Thursday that single-family homebuilding and permits for future construction tumbled to the lowest levels since May 2020. Housing inventory also declined.
Mortgage rates have jumped in response to high inflation, which has forced the Federal Reserve to unleash the fastest interest rate-hiking cycle since the 1980s. The 30-year fixed mortgage rate breached 7 percent in October for the first time since 2002, according to data from mortgage finance agency Freddie Mac. The rate averaged 6.61 percent in the latest week.
Existing home sales dropped sharply in all four regions.
Despite weakening demand, housing supply remains tight, limiting the slowdown in house price inflation.
The median existing house price increased 6.6 percent from a year earlier to $379,100 in October. That marked 128 straight months of year-over-year house price increases, the longest such streak on record. There were 1.22 million previously owned homes on the market, down 0.8 percent from both September and a year ago.
At October’s sales pace, it would take 3.3 months to exhaust the current inventory of existing homes, up from 2.4 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically remained on the market for 21 days last month, up from 19 days in September. Sixty-four percent of homes sold in October 2022 were on the market for less than a month.
First-time buyers accounted for 28 percent of purchases, down from 29 percent in September and a year ago. All-cash sales made up 26 percent of transactions, up from 24 percent a year ago.