US Existing Home Sales Hit 16-Year Low in October
US sales of previously owned homes dropped to a seasonally adjusted annual rate of 3.75m in October, an 8.8% decline from a year earlier, according to The Guardian, which cited National Association of Realtors
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US sales of previously owned homes dropped to a seasonally adjusted annual rate of 3.75m in October, an 8.8% decline from a year earlier, according to The Guardian, which cited National Association of Realtors data released Wednesday. It was the slowest pace since August 2010.
The median existing-home price edged up to $416,700. The Guardian reported that sales fell in the Midwest, South and West, while the Northeast held steady. The 30-year mortgage rate sits near 7.18%, not far from its 2023 high of 7.79%, after climbing on rising inflation and higher interest rates tied to the Iran war.
Also read: US CPI rises 0.4% in October, beating forecasts
Key facts
- October existing home sales: 3.75m annualized, down 8.8% year over year and the lowest since August 2010.
- Median existing-home price: $416,700.
- 30-year mortgage rate: about 7.18%, versus the 2023 peak of 7.79% and pandemic-era averages just above 3%.
- Pending home sales reached their lowest level in the NAR’s records in September, the month the 30-year rate topped 7% for the first time in nearly two years.
- The Federal Reserve raised rates in September for the first time since 2023, leaving them in a 3.75% to 4% range.
Why a 7% rate stings more than it used to
CNBC noted that today’s rate is not historic in isolation: the average 30-year fixed rate has run about 7.7% since Freddie Mac began tracking it in 1971, slightly above the current level of roughly 7.2%. The burden comes from prices. CNBC calculated that since 1997, when the average rate for the week ending Nov. 20 was 7.18% — essentially today’s level — the median existing single-family home price has risen 228% while median household income has gained 136%.
Using NAR and Census Bureau data, CNBC estimated that buyers today pay about $2,291 a month toward principal and interest on a median-priced home with 20% down, compared with roughly $1,650 if they spent the same share of income as 1997 buyers. That is about $640 more each month, before property taxes, insurance and maintenance.
Also read: Warsh Won't Signal October Fed Move as Markets Price a Hold
“A 7% mortgage rate isn’t historically outrageous, but a 7% mortgage on today’s home prices is a completely different animal,” Corinna Rose, a certified financial planner at Bell Investment Advisors, told CNBC. Realtor.com’s Hannah Jones told the outlet that home price growth has well exceeded wage growth over the last 10 to 15 years.
The two reports frame the cause differently. The Guardian emphasizes inflation and Federal Reserve policy, noting the central bank is poised to raise rates again next month. CNBC points to bond yields, persistent inflation, large federal borrowing needs and growing investment in AI and data centers competing for capital, as described by Cotality chief economist Selma Hepp.
Why it matters
Housing is the largest asset most US households hold, and a frozen resale market affects owners who want to move, first-time buyers already priced out, and the realtors, lenders and builders who depend on transaction volume. Affordability concerns carried weight in the midterm elections that gave Democrats control of Congress next year, and census data cited by The Guardian show rent growth outpacing inflation while the homeownership rate has stagnated since 2021.
Economists quoted by The Guardian do not treat the slump as permanent. NAR chief economist Lawrence Yun attributed the drop to mortgage costs, while Realtor.com’s Danielle Hale called it “a perfect storm of an abrupt shift in the financial environment and large uncertainties in the pre-election period.”
What to watch
The Federal Reserve’s next meeting is the immediate test, with The Guardian reporting the central bank is expected to raise rates again to fight inflation that rose more than expected in October. Fannie Mae’s October forecast, cited by CNBC, projected the average 30-year fixed rate holding at 7.5% through 2027.
This article describes reported market data and forecasts, not financial advice; mortgage rates and housing markets are volatile and outcomes are uncertain.
Sources: The Guardian, CNBC
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