U.S. home sales fell in October for ninth straight month

Sales of previously occupied U.S. homes fell in October for the ninth consecutive month to the slowest pre-pandemic sales pace in more than 10 years as homebuyers grappled with sharply higher mortgage rates, rising home prices and fewer properties on the market.

Existing home sales fell 5.9% last month from September to a seasonally adjusted annual rate of 4.43 million, the National Association of Realtors said Friday. The string of monthly sales declines this year is the longest on record going back to 1999, the NAR said.

Sales cratered 28.4% from October last year. Excluding the steep slowdown in sales that occurred in May 2020 near the start of the pandemic, sales are now at the slowest annual pace since December 2011, when the housing market was still mired in a deep slump following the foreclosure crisis of the late 2000s.

Despite the slowdown, home prices continued to climb last month, albeit at a slower pace than earlier this year. The national median home price rose 6.6% in October from a year earlier, to $379,100.

The median home price is down about 8% from its June peak, but remains 40% above October 2019, before the pandemic, said Lawrence Yun, the NAR’s chief economist.

“That’s really hurting affordability,” he said. “Most household incomes have not risen by 40%.”

The inventory of homes on the market declined for the third month in a row. Some 1.22 million homes were for sale by the end of October, down 0.8% from September, the NAR said.

That amounts to 3.3 months’ supply at the current pace. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.

The housing market has slowed as U.S. mortgage rates have more than doubled from a year ago, shrinking the buying power of Americans.

The average rate on a 30-year home loan was 6.61% this week, according to mortgage buyer Freddie Mac. A year ago, the average rate was 3.1%. Late last month, the average rate topped 7% for the first time since 2002.

That can add hundreds of dollars to monthly mortgage payments, and also discourage homeowners who locked in an ultralow rate the last couple of years from buying a new home. It’s part of the reason that there are fewer homes on the market.

Mortgage rates are likely to remain a significant hurdle for some time as the Federal Reserve has consistently signaled its intent to keep raising its short-term interest rate in its bid to squash the hottest inflation in decades.

Two weeks ago, the Fed raised its short-term lending rate by another 0.75 percentage points, three times its usual margin, for a fourth time this year. Its key rate now stands in a range of 3.75% to 4%.

While mortgage rates don’t necessarily mirror the Fed’s rate increases, they tend to track the yield on the 10-year Treasury note.