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U.S. existing home sales increased in October as lower mortgage rates encouraged buyers, though high home prices and unemployment continue to constrain the market. Sales reached a seasonally adjusted annual rate of 4.10 million units, slightly above forecasts, and first-time buyers accounted for 32% of transactions. Home inventory rose 10.9% year-over-year, but remains below pre-pandemic levels, with the median home price at USD 415,200. All-cash transactions grew, while distressed sales remained steady. Experts emphasize that first-time buyer participation still falls short of levels needed for a strong market.
U.S. existing home sales saw an increase in October, driven by buyers taking advantage of lower mortgage rates, although rising unemployment and high home prices continue to weigh on the housing market. Sales climbed 1.2% last month to a seasonally adjusted annual rate of 4.10 million units, according to the National Association of Realtors (NAR). This slightly exceeded economists' expectations of 4.08 million units and reflected a 1.7% rise compared with the same period last year. Advertisement
Lawrence Yun, chief economist at NAR, noted that home sales rose in October despite government shutdown challenges, as buyers were encouraged by lower mortgage rates. Data from mortgage finance agency Freddie Mac showed rates fell after the Federal Reserve resumed interest rate cuts, though the decline has paused with central bank officials indicating hesitation to reduce rates further next month. At the same time, a stagnant labor market is limiting potential buyers.
Affordable housing remains a pressing political issue. Earlier this month, former President Donald Trump proposed a 50-year mortgage to make homes more accessible. Experts and some of his supporters criticized the idea, highlighting that it could increase total interest payments and delay equity building. The NAR reported that the median age of first-time buyers is now 40, compared with buyers in their late 20s during the 1980s.
Inventory of existing homes rose 10.9% from last year to 1.52 million units, though it remains below pre-pandemic levels. The median price of existing homes grew 2.1% year-over-year to USD 415,200. At the current sales pace, it would take approximately 4.4 months to sell the current inventory, up slightly from 4.1 months last year.
First-time buyers made up 32% of all sales in October, an increase from 27% a year earlier, though economists suggest a 40% share is necessary for a healthy housing market. All-cash transactions represented 29% of sales, rising from 27% previously, while distressed sales, including foreclosures, held steady at 2%.
Source Reuters
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