US Existing-Home Sales Hit Slowest Pace Since August 2010

Sales of previously occupied U.S. homes fell 5.5% in October to a seasonally adjusted annual rate of 3.75 million units, the slowest pace in more than 16 years, the National Association of Realtors said Thursday. You have to go back to August 2010 — when the market was still reeling from the late-2000s housing crash — to find a weaker month.

Sales dropped 8.8% from October last year and missed the 3.8 million pace economists were expecting, according to FactSet. "It is just a tough market for buyers and sellers," said Lawrence Yun, NAR's chief economist.

What does this change for buyers and sellers?

For practitioners, the number that matters is context. Sales have hovered near a 4-million annual pace since 2023, well below the historic norm of roughly 5.2 million. October marks the third straight month below 4 million.

The culprit is borrowing cost. The average rate on a 30-year mortgage climbed above 7% in September and hit 7.4% early last month — its highest level in nearly three years, according to the source data. It briefly dipped below 6% before the U.S.–Iran war started in late February. That jump can add hundreds of dollars a month to a borrower's payment, and it has pushed many would-be shoppers to the sidelines.

Most of October's closings went under contract in September and August, when the 30-year rate ranged from 6.65% to 7.03%, according to Freddie Mac. So the worst of the rate spike hasn't fully shown up in the sales data yet.

Prices still climbing — but at a crawl

Despite the demand pullback, the U.S. median sales price rose 0.4% in October from a year earlier to $416,700 — an all-time high for the month of October in records going back to 1999, NAR said. Prices have risen on an annual basis every month since July 2023.

The listing side tells a softer story. The national median listing price fell 2.2% year over year to $415,000 in October, and about 20.5% of listings had their initial price cut, according to Realtor.com.

First-time buyers keep vanishing

First-time buyers accounted for just 29% of purchases last month, down from 31% in September and 32% in October last year, NAR said. The historical norm is closer to 40%. The affordability math simply doesn't work for most entry-level households at current rates.

Inventory is quietly piling up

Here's the practical flip side. There were 1.59 million unsold homes at the end of October — the highest level since November 2019, NAR said. Inventory rose 1.3% from September and 4.6% from a year earlier.

That translates to a 5.1-months' supply at the current sales pace, the largest since November 2015. A 4- to 6-month supply is traditionally considered balanced. Buyers who can afford current rates — or pay all cash — now have more choice and more negotiating leverage, especially on properties that have sat without offers for weeks or months.

What happens next?

The rate picture isn't loosening fast. Rates have eased from the October peak but stayed above 7%. Persistently high inflation has raised the odds that the Federal Reserve will raise its key interest rate at its December meeting, after holding steady late last month and raising rates in September. The Fed doesn't set mortgage rates directly, but its moves shape the bond yields lenders use to price home loans.

"With sales at a 16-year low, and the Fed poised to raise rates further, housing will remain under pressure for some time," Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets Economic Research, wrote in a note Thursday.

The broader slump dates to 2022, when mortgage rates began climbing from pandemic-era lows. Sales were essentially flat last year, stuck at a 30-year low, and Yun expects this year will likely end below that. For anyone in the trade, the takeaway is stark: fewer deals, choosier buyers, and a market where pricing power has started shifting — slowly — away from sellers.