Sales of existing homes in the United States fell for the ninth consecutive month in October, with a more pronounced impact in expensive coastal areas and regions that saw significant price increases at the height of the Covid-19 pandemic. , as more and more people struggled to qualify for mortgages.
Sales of existing homes fell 5.9% from September to October to a seasonally adjusted annual rate of 4.43 million homes, according to data released Friday by the National Association of Realtors. This marked a drop of more than 28% from the previous year.
“More potential buyers were squeezed out of qualifying for a mortgage in October as mortgage rates climbed,” said NAR chief economist Lawrence Yun. “The impact is greatest in expensive parts of the country and in markets that have seen significant house price increases in recent years.”
The northeast and west were the hardest hit regions of the country, with their respective sales dropping 6.6% and 9.1% from September to October. On an annual basis, they fell by 23% and 37.5%, respectively.
The average rate on a 30-year fixed-rate mortgage rose above 7% for the first time since 2001 in October, according to mortgage lender Freddie Mac, as the Federal Reserve continued to aggressively raise interest rates in the goal of controlling inflation.
But some relief for homebuyers could be in sight. On Thursday, Freddie Mac said the average 30-year fixed-rate mortgage rate fell to 6.61% for the week ending November 17, from 7.08% the previous week.
“Mortgage rates have come down since peaking in mid-November, so home sales may be on the verge of bottoming out in the current real estate cycle,” Yun said.
Despite the drop in sales, Yun said the housing market remained tight, with nearly a quarter of homes sold in October selling above asking price, a sign that several offers had been received.