US Markets
Tuesday, November 21st, 2023 3:05 pm EDT
Key Points
- Decline in Home Sales: Sales of previously owned homes in the United States experienced a significant decline of 4.1% in October compared to September, reaching a seasonally adjusted annualized rate of 3.79 million units. This marks the slowest sales pace since August 2010, and the actual figures were lower than analysts’ expectations of a drop to 3.9 million units. Year-over-year, home sales were down by 14.6%.
- Challenges for Homebuyers: Prospective homebuyers faced challenges in October due to a persistent lack of housing inventory and the highest mortgage rates in a generation. Lawrence Yun, the Chief Economist of the National Association of Realtors (NAR), highlighted the difficulty faced by buyers, but despite these challenges, multiple offers continued to occur, particularly for starter and mid-priced homes. However, concessions were observed in the upper end of the market.
- Tight Housing Supply and Rising Prices: The end of October saw a reduced inventory of homes for sale, down 5.7% from the previous year, with 1.15 million homes available. This is approximately half the pre-COVID inventory, representing a 3.6-month supply at the current sales pace. A six-month supply is considered a balanced market between buyers and sellers. The tight supply contributed to upward pressure on prices, with the median price of an existing home sold in October reaching $391,800, a 3.4% increase from a year ago. Prices increased in all regions of the country, with annual price increases expanding for four consecutive months. Approximately 28% of homes were sold above the list price.
In October, sales of previously owned homes in the United States dropped by 4.1% compared to September, reaching a seasonally adjusted annualized rate of 3.79 million units, according to the National Association of Realtors. This marks the slowest sales pace since August 2010 and is notably below analysts’ expectations of a smaller drop to 3.9 million units. Year-over-year, sales were down by 14.6%. The decline is attributed to a persistent lack of housing inventory and soaring mortgage rates, reaching the highest levels in a generation.
The October sales count reflects closings from contracts likely signed in August and September. Mortgage rates, which had dropped to nearly 7% at the end of August, rose sharply, surpassing 8% by mid-October, before somewhat retreating. Lawrence Yun, NAR’s chief economist, highlighted the challenges faced by prospective homebuyers due to these factors but noted that multiple offers, especially on starter and mid-priced homes, were still prevalent.
As of the end of October, there were 1.15 million homes for sale, marking a 5.7% decrease from the previous year and representing about half the pre-COVID inventory. This tight supply has kept pressure on prices, with the median price of an existing home sold in October reaching $391,800, a 3.4% increase from a year ago. Home prices rose across all regions of the country, and approximately 28% of homes were sold above the list price.
Sales declined across all price categories up to $750,000, but there was an increase in sales of higher-end homes, with those priced above $1 million up just over 9% from a year ago. First-time buyers represented 28% of October sales, unchanged from a year ago and notably lower than the historical average of 40%. Individual investors purchased 15% of homes, down from 18% in September and 16% from a year ago. All-cash deals accounted for 29% of sales, up from 26% in October 2022.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/21/home-sales-fell-to-a-13-year-low-in-october-as-prices-rose.html
