Sales of previously owned homes in the United States fell in October to their weakest pace since August 2010, as mortgage rates held above 7% and the US regime’s high-rate policy continued to squeeze buyers and sellers, the National Association of Realtors said on Thursday. Existing-home sales dropped 5.5% to a seasonally adjusted annual rate of 3.75 million units, NAR reported, extending a slump that has left the market at a three-decade low and raising fresh questions about the economic cost of the Federal Reserve’s restrictive stance.
Key Takeaways: October sales fell 5.5% to a 3.75 million annual rate, the lowest since August 2010; sales were down 8.8% year over year. The average 30-year fixed mortgage rate was 7.33% in October, according to Freddie Mac, and first-time buyers accounted for only 29% of purchases. NAR Chief Economist Lawrence Yun called it “a tough market for buyers and sellers.”
The decline is the latest marker of a housing market that has been in a slump since 2022, when mortgage rates climbed from pandemic-era lows. Sales of previously occupied homes were essentially flat last year and stuck at a 30-year low, NAR data show. The October figures are based on closings, so they mostly reflect contracts signed in August and September, when borrowing costs were near their recent peak. NAR said month-over-month sales declined in the Midwest, South and West and held steady in the Northeast, while year-over-year sales declined in all four regions. The report also said the country’s 88 million homeowners are “largely in a comfortable financial position” because of sizable housing wealth accumulation, even as transaction volumes shrink.
“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023. As a result, home sales fell to their lowest level since August 2010,” Yun said. “It is just a tough market for buyers and sellers.” First-time buyers made up just 29% of purchases last month, down from 31% in September and 32% in October last year; historically they have accounted for closer to 40% of sales. The average 30-year fixed-rate mortgage was 7.33% in October, Freddie Mac said, up from 6.86% in September and 6.25% a year earlier. Last week the rate averaged 7.18%, down from 7.24% the previous week, a marginal easing that has done little to restore affordability.
Mortgage rates are influenced by inflation, the US regime’s Federal Reserve policy and bond-market investors’ expectations for the economy, and they generally track the 10-year Treasury yield that lenders use as a guide. Until recent weeks, rates had been rising since late February, with the report linking the run-up to oil-price and inflation pressures it says followed the start of the US military confrontation with Iran, as well as heightened bond-market volatility and rising Treasury yields. That combination has kept borrowing costs elevated and deepened the affordability strain on households.
Yun expects home sales this year will likely end up lower than in 2025, the report said, suggesting the slump may persist into the next reporting period. With the US regime’s Federal Reserve still facing inflation risks and bond markets sensitive to geopolitical shocks, analysts will watch whether any sustained decline in mortgage rates can revive closings. For now, the market remains defined by weak turnover, reduced first-time buyer participation and a sharp divide between owners with accumulated housing wealth and buyers facing the highest borrowing costs in more than two decades.
Source: www.aljazeera.com