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Existing home sales fell for the ninth month in a row as homebuyers continued to find themselves squeezed out of the market by high mortgage rates, according to data released Friday from the National Association of Realtors.
Sales of existing homes fell 5.9 percent between September and October to a seasonally adjusted rate of 4.43 million — 28.4 percent lower than they were in October 2021.
The median sale price for an existing home rose to $379,100 — an increase of 6.6 percent from the previous year — while the inventory of unsold existing homes fell for the third consecutive month to 1.22 million, representing 3.3 months of supply at the current sales rate, an 0.8 percent decrease from both September 2022 and October 2021 according to NAR.
Lawrence Yun | Photo credit: NAR
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” said NAR Chief Economist Lawrence Yun. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”
Inventory of unsold existing homes is inching down and remains well below pre-2020 levels — mostly due to homeowners being unwilling to list their homes and be thrust into a high mortgage rate environment — which is resulting in some of the few homes on the market receiving multiple offers despite the drop off in demand.
“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” he said.
Twenty-four percent of homes received over the asking price in October, according to the new data. Meanwhile, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8 percent.
The low levels of supply have thus far kept prices from falling even further, experts said.
“Home sales are plummeting, and prices have fallen four months in a row,” Holden Lewis, a home and mortgage expert at the personal finance website NerdWallet, said in a statement. ” It’s a classic tale of prices falling along with demand. But supply is dwindling, too, a situation that has kept prices from falling further than they otherwise would have. Homeowners are refraining from listing their homes for sale for two reasons: They don’t want to let go of their low mortgage rates, and they don’t want to sell their homes for less than they would have gotten just a few months ago.”
The consistent drop off in sales activity seems likely to continue unless conditions change dramatically, which doesn’t seem like a likely outcome in the near future.
There are a few factors that could improve affordability and bring buyers back: Robust wage increases for buyers; a broad decline in home prices; meaningfully lower mortgage interest rates; and/or a jump in inventory, especially of more-affordable homes,” Neda Navab, president of U.S. regional operations at Compass said in a statement. “But like a group of overly courteous drivers stuck at a four-way stop, none of those factors seems especially likely to budge any time soon.”
