Existing-Home Sales Dip in October, Falling 4.1%

Key takeaways:

• October existing-home sales declined 4.1% month-over-month, with a significant 14.6% annual drop
• The nationwide median sale price in October was $391,800 — a decrease from September but a 3.4% increase from the previous year
• The inventory level remained tilted towards sellers in October, but unsold existing homes grew 1.8% month-over-month to a 3.6-month supply

Existing home sales continue decline

Existing-home sales decreased 4.1% in October compared to the previous month, according to the National Association of Realtors (NAR). Moreover, the metric dropped 14.6% from October 2022. Alongside this decline, the median existing-home sales price increased by 3.4% annually, reaching $391,800.

“Existing Home Sales continue to lag as interest rates remain high and home prices both prove to be a large barrier to purchasing,” said Selma Hepp, chief economist at CoreLogic. “There really is nowhere to go but up in 2024. In addition to existing home sales, and with expected decline in interest rates, homebuilders will have more homes ready for purchase, which, working together, could drive overall home sales higher next year after a lackluster 2023.”

Regionally, existing-home sales mostly experienced the same results. The South had the largest short-term drop of 7.1% from September while falling 14.6% from October 2022. The Northeast dipped 4% monthly and 15.8% yearly. The West declined 1.4% and 14.8%, respectively. Meanwhile, the Midwest had flat existing sales month-over-month and registered a 13.9% annual decrease.

Factors influencing the market

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

Given the ongoing lack of supply, properties on the market still receive multiple offers, especially starter- and mid-priced homes, he said. Although we’ve seen plenty of interest rate growth in 2023, the average 30-year fixed rate mortgage (FRM) came down four times in November. With inflation dissipating, it’s possible the recent interest rate descension is a harbinger of things to come.

“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years. Though limited now, expect housing inventory to improve after this winter and heading into the spring. More inventory will result in more home sales.”

Other notable data from the report showed housing inventory grew to a 3.6-month supply in October from 3.4 months in September and 3.3 months in October 2022. Traditionally, a balanced housing market is defined by having six months worth of inventory. Additionally, time on market stretched to 23 days in October, up from 21 days month-over-month and the year prior. All-cash buyers accounted for 29% of existing home sales for the month, static from September but grew annually from 26%.

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 homebuyer, 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.