A “For Sale” sign outside a home in Albany, Calif., Tuesday, May 31, 2022.
David Paul Morris | Bloomberg | Bloomberg | Getty Images
Home sales fell for the ninth straight month in October. This is because rising interest rates and skyrocketing inflation kept buyers on the sidelines.
Sales of previously owned homes fell 5.9% from September to October, according to the National Association of Realtors. This is the slowest pace since December 2011, but fell at a very short pace early in the Covid-19 pandemic.
October figures show seasonally adjusted sales of 4.43 million on an annualized basis. Sales decreased by 28.4% year-on-year.
Supply is still stubbornly low even as sales slow. He sold 1.22 million homes at the end of October, a decrease of less than 1% both month-over-month and year-over-year. That’s 3.3 months supply for him at the current sales pace. Historically, a balanced market is considered his six-month supply.
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The average price of a pre-owned home sold in October was $379,100, up 6.6% from the previous year. However, the seasonal decline in house prices this time of year appears to be much more severe than usual, so price gains have diminished.
NAR chief economist Lawrence Yun said, “Inventory levels remain tight, which has led to multiple offers for homes for sale.” Conversely, homes that have been on the market for more than 120 days saw an average price reduction of 15.8%.”
Overall, from September 19th and October 18th, 2021, there are 21 days to close for homes in October. If homes are priced appropriately, there will still be strong demand.
Sales are now depressed across all price points, but the weakest in the $100,000 to $250,000 range and the $1 million+ range. On the lower end, it’s likely due to a severe shortage of available housing in that price range. Inflation and uncertainty in the global economy, along with heavy stock market losses, may weigh heavily on high-end buyers.
Sales among first-time buyers, who are likely to be most sensitive to rising mortgage rates, fell to just 28% from 29% a year earlier. This cohort typically accounts for his 40% of home purchases. Only 16% of homes sold in October were available for purchase, compared to 17% in October 2021, prompting investors and second-home buyers to retreat.
Mortgage rates are more than double the lows recorded earlier this year. However, recent interest rate fluctuations are wreaking havoc on potential buyers. Interest rates spiked in his June, settled in July and August, and continued to rise further in September and October. After that, they plummeted quite a bit again last week.
“For many people, the weekly volatility in mortgage rates alone By 2022 it will be three times the normalRealtor.com Chief Economist Daniel Hale said: He knows how to set a budget and stick to it. ”