Sales of previously owned homes in the US rose in October to the fastest pace in eight months, as buyers took advantage of lower mortgage rates and gained the upper hand over sellers in some markets.
Contract closings climbed 1.2% to an annual rate of 4.1 million last month, according to National Association of Realtors data released Thursday. Economists surveyed by Bloomberg expected a rate of 4.08 million. The median sales price gained 2.1% from a year ago to $415,200, extending a run of year-over-year price increases dating back to mid-2023.
READ MORE:
The uptick in October sales — a period when the federal government shut down — was the second straight and points to a housing market showing some signs of life after remaining stuck around 4 million — a historically low level — for most of the year.
The improvement was fueled in part by a decline in borrowing costs, which dropped to the 6.3% range last month from nearly 7% in May. Sales were strongest among more expensive homes — particularly those costing $750,000 or more.
"Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates," NAR Chief Economist Lawrence Yun said in a statement.
Last month, the supply of previously owned homes for sale fell 0.7% to 1.52 million, still near its highest level since mid-2020, NAR data show. Homes remained on market 34 days last month, the longest stretch for any October since 2019, Yun said on a conference call.
READ MORE:
A drop to a 5.8% or 5.9% mortgage rate may make a bigger difference to get sales moving, Yun said. But to get back to pre-Covid levels, "it requires drastically larger supply," he said. "We're not seeing that. And a much more meaningful decline in mortgage rates."
Nationwide, sellers outnumbered buyers last month by about 500,000, giving the latter some power to demand discounts and other concessions, Redfin
In the NAR report, sales in the South, the nation's biggest home-selling region, increased 0.5%, marking the strongest rate since February. Sales in the West fell 1.3%, while sales were flat in the Northeast. The Midwest led US regions with a 5.3% sales gain.
First-time buyers accounted for 32% of closings, up slightly from 30% a month earlier.
The NAR will provide another look at the previously owned home market on Tuesday, when it releases October pending sales. Those are based on contract signings.
