US existing home sales fell to their lowest level in more than 16 years in October, as rising mortgage rates and still-elevated house prices kept potential buyers on the sidelines. Inventory grew while first-time buyers made up a smaller share of purchases.
US existing home sales dropped 5.5% in October to a seasonally adjusted annual rate of 3.75 million units, the National Association of Realtors said on Thursday. That was the lowest level since August 2010. Economists polled by Reuters had forecast a 3.85 million unit rate.
Sales also plunged 8.8% on a year-over-year basis. They fell in the South, Midwest and West, but stayed unchanged in the Northeast.
Mortgage rates climbed after the Iran attack
Home sales are counted at the closing of a contract, so October's figures likely reflect contracts signed in August and September. The 30-year fixed mortgage rate jumped above 7% in late August and reached 7.40% by mid-September, Freddie Mac data showed.
That marks a rise of 142 basis points since the US and Israel attacked Iran at the end of February. The rate then averaged 7.18% last week, down from 7.24% the week before.
Supply grows as first-time buyers retreat
Existing housing inventory increased 1.3% to 1.590 million units. At October's sales pace, it would take 5.1 months to exhaust that supply, the most since November 2015.
The median existing home price advanced 0.4% from a year ago to $421,900, the highest for any October.
First-time buyers accounted for 29% of sales, down from 31% in September and 32% a year ago. A 40% share in this category is needed for a robust housing market. Meanwhile, individual investors and second-home buyers made up 20% of transactions, up from 16% a year ago.
Source: Reuters via Investing.com
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