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Sales of previously-owned homes dropped 4.1% between September and October, according to data from the National Association of Realtors.
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Activity is now at a 13-year low as rising borrowing costs take their toll on the US housing market.
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Mortgage rates have cleared 7.5% this year, driven higher by the Federal Reserve’s war on inflation.
The spike in mortgage rates dragged on the US housing market once again last month, as activity plunged to a 13-year low even as prices ticked up.
Sales of previously-owned homes fell 4.1% to just under 3.8 million units between September and October, per National Association of Realtors data published Tuesday, for the weakest figures since August 2010.
Meanwhile, the median existing-home price rose 3.4% year-on-year to hit a new all-time high of around $390,000, in a sign the lull in activity is likely being driven by weak supply rather than falling demand.
Soaring mortgage rates, driven to their highest level since the turn of the century by the Federal Reserve’s war on inflation, have fueled the housing-market slowdown.
Between November 2021 and this month, the average 30-year fixed rate mortgage has jumped from 3.1% to 7.4%, according to data from Freddie Mac.
As a result, existing homeowners have opted to cling to the historically low mortgage rates they locked in over the last 15 years rather than move house. Just 1% of Americans sold their houses over the first half of 2023, starving the market of supply.
Consistently low inventory levels have further dragged on activity in the US’s housing sector, with the country short anywhere between 1.5 million and 5.5 million homes, according to estimates by the Biden Administration and the NAR.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” the NAR’s chief economist Lawrence Yun said.
The latest data is a sign that this remains a seller’s market, he added.
“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”
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