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Sales of previously owned homes rose in October following a brief dip in mortgage rates, posting the first year-over-year gains since 2021.
Total existing-home sales increased 3.4% from September to a seasonally adjusted annual rate of 3.96 million last month, the National Association of Realtors® reported Thursday. The October sales figure, which excludes new construction, represented a 2.6% gain from one year ago.
Median home prices continued to rise on an annual basis last month, increasing 4% from October 2023 to $407,200. It marked the 16th consecutive month of year-over-year price increases.
The annual gain in home sales was the first seen since July 2021. However, the year-over-year gain was boosted by the low number of sales a year earlier, when mortgage rates reached their recent peak of nearly 8% in October 2023.
Rates on 30-year fixed mortgages averaged 6.43% last month after reaching a two-year low of 6.18% in September, according to Freddie Mac. Home sales, defined by NAR as completed transactions, often take weeks or months to close after a contract is signed, and the October bump may reflect a rush to take advantage of the lower rates seen in September.
“October data show that mortgage rates continue to be an important mediator of home sales activity,” says Realtor.com® chief economist Danielle Hale. “The sharp uptick in mortgage rates since September, despite the Fed’s rate cuts, is likely to weigh on home sales activity early in 2025.”
On the other hand, the uptick may signal a thawing in the market as buyers take advantage of a rising supply of homes for sale, and a continued strong economy boosts buyer confidence.
The supply of unsold homes was 1.37 million units at the end of October, up 0.7% from September and a 19.1% jump from one year ago. That represented a supply of 4.2 months at the current sales pace, down from 4.3 months in September but up from 3.6 months a year earlier.
“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” says NAR chief economist Lawrence Yun. “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”
Home sales rise in all four regions
Despite the impact of multiple hurricanes in the South last month, home sales rose there in October, as well as in the other major geographic regions.
Sales of existing homes in the South increased 2.9% from September to an annual rate of 1.77 million in October, up 2.3% from one year before. The median price in the South was $361,200, up 0.9% from one year earlier.
In the Northeast, home sales grew 2.2% in October from the prior month to an annual rate of 470,000, unchanged from a year ago. The median price in the Northeast was $472,900, up 7.6% from last year.
In the Midwest, existing-home sales climbed 6.7% on a monthly basis in October to an annual rate of 950,000, up 1.1% from the prior year. The median price in the Midwest was $305,300, up 7.2% from October 2023.
Existing-home sales in the West increased 1.3% in October to an annual rate of 770,000, up 8.5% from a year earlier. The median sales price in the West was $627,700, up 4.4% from October 2023.