Existing-Home Sales Rise in October, First Annual Increase in Three Years

Key takeaways:

• October existing-home sales increased 3.4% month-over-month and 2.9% annually
• The nationwide median existing-home sales price hit $407,200 in October — a 4% gain from the previous year
• The inventory of unsold existing homes grew 0.7% month-over-month and 19.1% year-over-year to a 4.2-month supply at the current pace of sales

Existing home sales grow

Existing-home sales increased 3.4% in October compared to September and 2.9% from the year before, according to the National Association of Realtors (NAR).

Meanwhile, the median existing-home sales price grew to $407,200. That rose 4% annually from $391,600.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, chief economist at NAR. “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time home buyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”

Regionally, the South had the most existing-home sales in July, with an annual rate of 1.77 million units. That rose 2.3% from the year prior. The median price grew 0.9% annually to reach $361,500.

The Midwest’s 950,000 units came next, up 1.1% year-over-year. Its median price rose 7.2% to $305,300.

The West accounted for 770,000 existing sales, increasing 8.5% from one year ago. Typically the costliest part of the country, the median price increased annually by 4.4% to $627,700.

The Northeast’s 470,000 sales held flat annually. The median price jumped 7.6% from a year earlier to $472,900.

Factors influencing the market

NAR Chief Economist Lawrence Yun has pointed to two significant factors impacting existing-home sales: low for-sale inventory and high mortgage rates.

Given the ongoing tight supply, properties on the market still receive multiple offers, especially starter- and mid-priced homes, he said.

“The housing market continues to unthaw slowly amid considerable affordability challenges brought on by high interest rates and rising homeownership expenses,” said Selma Hepp, chief economist at CoreLogic. “Lower mortgage rates later this year will provide a breather, though the average potential home buyer continues to maintain a wait-and-see approach. Improvements in existing for-sale inventory are critical and will help thaw out sales further.”

Housing inventory reached 1.37 million units at the end of October, up 0.7% monthly and 19.1% year-over-year. Unsold homes sit at a 4.2-month supply at the current sales pace, down from 4.3 months in September but up from 3.6 months the year before. Traditionally, six months worth of inventory defines a balanced housing market.

Moreover, time on market expanded to 29 days in October, up from September’s 28 days and 23 days the year before. All-cash buyers accounted for 27% of existing-sales, down from 30% and 29% the month and year prior, respectively.

Navigating the housing market

Embarking on the journey to homeownership is an exciting and significant step in one’s life. To help you navigate this path successfully, we’ve compiled three practical tips:

1. Stay on top of housing inventory: Keep an eye on changes in inventory levels, as this can impact your choices and negotiation power. Be ready to act when the right opportunity arises.
2. Assess your budget and financing options: With low housing affordability being a factor in declining sales, it’s crucial to evaluate your financial circumstances. Explore different financing options and ensure that you find a home that aligns with your budget and long-term financial goals.
3. Be proactive and act quickly: When you find a home that meets your criteria, be proactive and act quickly to avoid missing out. The best way to do so is by securing a mortgage prequalification in advance.

The bottom line

As a home buyer, navigating the current real estate market can feel overwhelming at times. But armed with the right knowledge, you can approach the process with confidence.

Stay informed about the latest trends, assess your budget, explore down payment assistance programs in your area, and act quickly when you find the right home.