WASHINGTON – Elevated mortgage rates averaged 7.62% in October, the highest rate since 2000, depressing buyer demand and pushing down new home sales in October, according to Freddie Mac and the National Assn. of Home Builders.
Existing home sales are also down, falling 14.6% from a year ago and 4.1% from September, according to the National Assn. of Realtors.
Sales of newly built, single-family homes in October fell 5.6% to a 679,000 seasonally adjusted annual rate, following a notable downward revision in September, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“New home sales fell back in October as interest rates moved higher,” said Alicia Huey, NAHB chairman and a custom home builder and developer from Birmingham, Ala. “Despite the challenging conditions, sales are up 4.6% on a year-to-date basis due to a lack of inventory in the resale market.”
“Median new home prices have moved lower as new home size has decreased in 2023,” added NAHB Chief Economist Robert Dietz. “Combined with sales incentives and a lack of resale inventory, demand has remained solid in 2023 and should improve in 2024 as interest rates move lower.”
For existing homes, sales fell year-over-year in all four of the U.S. major regions. Month over month, sales fell in the Northeast, South and West but saw no change in the Midwest.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said NAR Chief Economist Lawrence Yun. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”
Total housing inventory registered at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from one year ago (1.22 million). Unsold inventory sits at a 3.6-month supply at the current sales pace, up from 3.4 months in September and 3.3 months in October 2022.
The median existing-home price for all housing types in October was $391,800, an increase of 3.4% from October 2022 ($378,800). All four U.S. regions registered price increases.
“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”