Washington, DC CNN —
Home sales could experience their worst year in 30 years. Sales plummeted in October and prices continued to rise Mortgage rates have risen last month and inventories have remained extraordinarily low. That has kept homebuyers out of the market, according to a monthly report from the National Association of Realtors released Tuesday.
Home sales remained at a 13-year low as buyers competed for the few available homes on the market and continued to drive up prices. High prices, along with the average rate of a 30-year fixed rate mortgage close to 8% in Octoberthey created the less convenient market in several decades.
The average price for existing homes – which includes single-family homes, townhomes, condominiums and cooperatives – rose to $391,800 last month. This was a 3.4% increase from a year ago and marked the fourth consecutive month of year-over-year price increases. It was the highest average price on record for the month of October. Prices increased in all four regions of the country, the Northeast, Midwest, South and West, NAR found.
According to the report, rising costs for buying and financing a home pushed sales to a seasonally adjusted annualized rate of 3.79 million, down 4.1% from September and 14.6% compared to a year ago. This fell short of analysts’ expectations of 3.9 million units sold. Home sales fell from last month in the Northeast, South and West, but remained unchanged in the Midwest.
“Prospective homebuyers experienced another difficult month due to a persistent lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, chief economist at NAR. “However, numerous offers are still occurring, especially for starter and mid-priced homes, although price concessions are occurring at the high end of the market.”
Of homes sold in October, 28% went above the listing price, suggesting there was a bidding war among would-be buyers.
“There are lingering effects of multiple offers, with more people forgoing home inspection and appraisal contingencies,” Yun said. “Given the lack of inventory, home sellers are in the driver’s seat, they like offers that waive such contingencies.”
In October, 24% of home buyers opted out of home inspections, up from 20% a year ago; 21% waived the appraisal contingency, up from 18% a year ago.
Home sales fell in the lower price categories – under $750,000 – due to a lack of inventory, while sales grew in the higher price categories where there was more inventory.
“Where there is more inventory you can make more sales,” Yun said.
The inventory of homes for sale at the end of October stood at 1.15 million units, up 1.8% from September. Typical inventory levels before the pandemic were around 1.9 million, meaning there were about half the number of homes for sale as there were before Covid.
Properties typically remained on the market for 23 days in October, compared to 21 days in September 2023 and October 2022. More than half of homes sold in the past month remained on the market for less than a month.
First-time buyers were responsible for 28% of October sales.
“First-time buyers are still not able to exceed 30% on a consistent basis,” Yun said.
All-cash sales accounted for 29% of October transactions, unchanged from September but up from 26% in October 2022.
“The lack of inventory and higher interest rates really hurt the home sales market,” Yun said. “Maybe in a couple of months we will see some improvements in terms of accessibility.”