US Home Sales See First Annual Gain in Over 3 Years

Last month, sales of previously occupied U.S. homes saw the first annual gain in over three years.

The National Association of Realtors (NAR), America’s leading real estate trade association, said Wednesday that existing home sales climbed 3.4 percent in October from September to a seasonally adjusted annual rate of 3.96 million.

Existing home sales increased 2.9 percent compared with October last year—the first year-over-year gain since July 2021.

More Homes To Sell

There were 1.37 million unsold homes at the end of October, a 0.7 percent increase from September and a 19 percent increase from October 2023, according to NAR.

This means there is a 4.2-month supply at the current sales pace, up from a 3.6-month supply at the end of October 2023. A 5- to 6-month supply is generally considered a balanced market between buyers and sellers.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” NAR chief economist Lawrence Yun said.

That said, this year’s existing home sales are on track for the lowest annual home sales since 1995, according to Yun.

Easing Mortgage Rates Encourage Home Shoppers

The housing market has been in a sales slump since 2022 when mortgage rates started to rise from the lows experienced during the COVID-19 pandemic.

Last year, existing home sales dipped to a nearly 30-year low as the average rate on a 30-year mortgage surged to a 23-year high of almost 8 percent, according to mortgage buyer Freddie Mac.

Mortgage rates started to ease in July, for the most part, hitting their lowest average in two years in late September, 6.08 percent, when many of the purchase contracts on homes that officially sold in October were likely signed.

Mortgage Rates Rise for Six Weeks

Borrowing costs on a 30-year home loan have since crept higher after reaching a two-year low in September, peaking at 6.79 percent in early November.

On the bright side, mortgage rates did slightly dip to 6.78 percent last week, according to Freddie Mac.

Last week’s mortgage rate cut came after the Federal Reserve cut its benchmark interest rate on November 7 by a quarter-point, lowering rates to between 4.5 to 4.75 percent.

This was the second interest rate cut in four years after the Fed raised interest rates 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the COVID-19 pandemic.

The Fed first lowered its benchmark rate, which was at a 23-year high, in September when it got cut by a half-percentage point.

This article includes reporting from The Associated Press.