Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010, the National Association of Realtors (NAR) said on Tuesday. Home resales are counted at the closing of a contract.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, the NAR’s chief economist.
There were 1.15 million previously owned homes on the market last month, down 5.7% from a year ago. At October’s sales pace, it would take 3.6 months to exhaust the current inventory of existing homes, up from 3.3 months a year ago.
A four- to seven-month supply is viewed as a healthy balance between supply and demand. With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend. The median existing house price increased 3.4% from a year earlier to $391,800, the highest for any October.
Properties typically remained on the market for 23 days in October, up from 21 days a year ago. Sixty-six per cent of homes sold in October were on the market for less than a month.
First-time buyers accounted for 28% of sales, as they did a year ago. This share is well below the 40% that economists and realtors say is needed for a robust housing market.
All-cash sales accounted for 29% of transactions compared with 26% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from the previous year.