Sales of existing US homes fell for the ninth straight month in October, with the impact more pronounced in expensive coastal areas and regions that had significant price increases during the height of the Covid-19 pandemic, as more people struggled to qualify for mortgages.
Existing home sales declined 5.9 per cent from September to October to a seasonally adjusted annual rate of 4.43mn homes, according to data released by the National Association of Realtors on Friday. That marked a more than 28 per cent drop from the previous year.
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” NAR chief economist Lawrence Yun said. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”
The northeast and west were the hardest hit areas of the country, with their respective sales falling 6.6 per cent and 9.1 per cent from September to October. On a yearly basis, they fell 23 per cent and 37.5 per cent, respectively.
The average rate for a 30-year fixed-rate mortgage topped 7 per cent for the first time since 2001 in October, according to mortgage lender Freddie Mac, as the Federal Reserve continued to raise interest rates aggressively in an effort to tame inflation.
But some relief for home buyers could be in sight. On Thursday Freddie Mac said that the average 30-year fixed-rate mortgage rate went down to 6.61 per cent for the week ending November 17, from 7.08 per cent the previous week.
“Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle,” Yun said.
Despite the decline in sales, Yun said it is still a tight housing market, with almost a quarter of homes sold in October sold above asking price, a sign of receiving multiple offers.
