Home sales fell for the 9th month in a row in October

Home sales fell for a ninth straight month in October as higher interest rates and rising inflation kept buyers on the sidelines.

Sales of previously owned homes fell 5.9% from September to October, according to the National Association of Realtors. That was the slowest pace since December 2011, except for a very brief drop at the start of the Covid-19 pandemic.

The October data put sales at a seasonally adjusted annual rate of 4.43 million units. Sales were 28.4% lower year-over-year.

Even as sales slow, supply remains low. There were 1.22 million homes for sale at the end of October, down just under 1% month-on-month and year-over-year. That’s 3.3 months’ supply at current sales rates. Historically, a balanced market was considered a six-month supply.

The median price of an existing home sold in October was $379,100, up 6.6% year over year. However, the price gains are easing as the seasonal decline in home prices at this time of year seems to be much deeper than usual.

“Inventory levels are still tight, which is why some homes for sale are still getting lots of offers,” said Lawrence Yun, NAR’s chief economist. “In October, 24% of homes received above asking price. In contrast, homes that were on the market for more than 120 days saw prices drop by an average of 15.8%.”

Overall, homes were contracted for 21 days in October, up from 19 days in September and 18 days in October 2021. More than half, 64%, of homes sold in October 2022 were already sold. has been on the market for less than a month, indicating that there is still strong demand if the home is priced right.

While sales are currently falling across all price points, they are weakening the most in the $100,000 to $250,000 range and in the over $1 million range. On the lower end, that could be due to a severe shortage of homes available in that price range. Massive losses in the stock market, as well as inflation and global economic uncertainty, could weigh on high-end buyers.

First-time buyers, who are likely to be most sensitive to rising mortgage rates, accounted for just 28% of sales, down from 29% the year before. This cohort typically accounts for 40% of home purchases. Investors or second home buyers have retreated, buying only 16% of homes sold in October compared with 17% in October 2021.

Mortgage rates are now more than double the record low seen earlier this year. But the recent volatility in rates is also wreaking havoc on potential buyers. Prices spiked in June, stabilized again in July and August, and continued higher in September and October. Then they fell back pretty sharply last week.

“For many people, the weekly volatility of mortgage rates alone, which in 2022 is already three times more than normalDanielle Hale, chief economist at Realtor.com, notes: “With weekly changes in mortgage rates causing monthly housing costs to change by more than $100 for a median-priced home, it’s hard to know how to set and stick to a budget.”