Home buyers were positive and engaged in the housing market in October, with existing-home sales, new-home sales, and new-home mortgage applications all increasing on a year-over-year basis in the month.
According to the National Association of Realtors (NAR), total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—rose 3.4% month over month and 2.9% year over year to a seasonally adjusted annual rate of 3.96 million in October. Existing-home sales posted a year-over-year gain for the first time since July 2021. Single-family home sales increased 4.1% year over year to a seasonally adjusted annual rate of 3.58 million in October.
“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions," says NAR chief economist Lawrence Yun. “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time home buyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”
Data from Redfin supports the NAR’s findings, indicating the number of people contacting agents for help buying and/or selling their home was up by double digits on a year-over-year basis for the four weeks ending Nov. 17.
“The burst of buyers and sellers jumping into the market is the result of pent-up demand from people who were waiting for the election to pass, and for the Fed to cut interest rates a second time,” Redfin economic research lead Chen Zhao says. “Even though mortgage rates have been rising since both of those things happened, house hunters who had pressed pause are jumping back in.”
According to the NAR, total housing inventory at the end of October was 1.37 million units, up 19.1% from one year ago. Unsold inventory sits at a 4.2-month supply at the current sales pace, up from 3.6 months in October 2023.
The median existing-home price for all housing types in October was $407,200, up 4% on a year-over-year basis. The median existing single-family home price was $412,200 in October, up 4.1% from October of 2023.
On a regional basis, existing-home sales increased on a year-over-year basis in the Midwest, South, and West, but remained flat in the Northeast. The largest annual increase occurred in the West. Prices increased on a year-over-year basis in all four regions, with the largest percentage increase occurring in the Northeast. Median prices remain the highest in the West ($627,700).
“The ongoing price gains mean increasing wealth for homeowners nationwide,” says Yun. “Additional inventory and more home building activity will help price increases moderate next year.”
The new-home market also experienced a more positive month, with the Mortgage Bankers Association (MBA) Builder Application Survey indicating mortgage applications for new homes increased 3% month over month and 8.2% year over year in October. MBA vice president and deputy chief economist Joel Kan says estimated new-home sales were also higher on a year-over-year basis, with new homes remaining an attractive alternative as resale inventory remains constrained in some markets.
Mortgage rates leveled off last week following a six-week climb, but rose again for the week of Nov. 21, according to Freddie Mac. The Freddie Mac Primary Mortgage Market Survey indicated the 30-year fixed-rate mortgage averaged 6.84% as of Nov. 21, up 60 basis points from a week ago, but well below the 7.29% average during the same week a year ago.
“Mortgage rates ticked back up this week, continuing to approach 7%,” says Sam Khater, chief economist for Freddie Mac. “Heading into the holidays, purchase demand remains in the doldrums. While for-sale inventory is increasing modestly, the elevated interest rate environment has caused new construction to soften.”
First-time home buyers remain active in the new-home market, with the share of FHA loans elevated at 29% in October. According to the NAR, first-time buyers were responsible for 27% of existing-home sales in October. The association’s Profile of Home Buyers and Sellers found the annual share of first-time existing-home buyers was 24%, the lowest level ever recorded.
In the resale market, cash sales accounted for 27% of existing-home transactions in October, down from 30% in September and 29% in October 2023. Individual investors or second-home buyers purchased 17% of homes in October, up from 15% in the same month of 2023.
