Home sales dropped 5.9% in October, continuing a 9-month trend
Existing home sales were down more than 28% year-over-year, according to the National Association of Realtors, with the sharpest decline in the West.
- Sales volume was slightly better than predicted, but declines were seen across all U.S. regions.
- Lawrence Yun, NAR chief economist, said that “the impact is greater in expensive areas of the country.”
- The seasonally adjusted rate was 4.43 million existing single family homes sold in October.
The National Association of Realtors delivered another disappointing home sales report Friday that showed sales in October dropping for the ninth straight month, down more than 28% from a year ago.
The monthly drop in existing home sales continued the longest streak of declining home sales on record. Across the country, month-over-month sales of previously owned homes dipped 5.9% to a seasonally adjusted annual rate of 4.43 million. The sales volume was slightly better than the forecasted 6.6% drop that economists had predicted.
No U.S. region was immune to the drop in sales, though some areas fared better than others. The sharpest drop was seen in the West, followed by the Northeast — the regions with the highest median home prices. The softest impact was in the South, where median prices are lower.
"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher," said Lawrence Yun, NAR chief economist. "The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years."
NAR reported the following home sale numbers by region for October:
Northeast: Existing-home sales fell 6.6% from September. The decline was a 23% drop from October 2021.
Midwest: Home sales dipped 5.3% over September and fell more than 25% from last year.
South: Home sales were off by 4.8% from the prior month, representing a 27% decrease from this time last year.
West: Home sales declined 9.1% from September, down 37.5% from one year ago.
Nationally, the median sales price for a home was $379,100, up 6.6% from 2021. The inventory of unsold homes fell for the third straight month to 1.22 million homes in October.
Though home sales continued to decline, the number is nowhere near the low of 3.77 million homes sold in November 2008 at the start of the Great Recession. Mark Zandi, chief economist at Moody's Analytics, said the softening real estate market does not compare to the housing crisis 15 years ago, and he remained optimistic that the country can avoid a recession.
Despite the drop in home sales, inventory remains tight, and that may become more of an issue if more buyers take advantage of declining interest rates.
Yun responded Friday to the latest U.S. Census data on housing starts, warning of a potential housing shortage. "Single-family starts are 21% below one year ago and well below historical averages," he said, but with the lowering of mortgage rates, "the gate is opening for more homebuyers to qualify for a mortgage." The drop in rates could also be a sign that "home sales may be close to reaching the bottom in the current housing cycle," Yun said.