U.S. existing-home sales drop in October to lowest level since 2010

Key details: The inventory of homes for sale at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from a year earlier.

Unsold inventory was at a 3.6-month supply at the current sales pace. up from 3.4 months in September and 3.3 months in October 2022.

The median price for an existing home was $391,800, up 3.4% from October 2022. This is the fourth straight month of year-over-year price gains.

First-time buyers accounted for 28% of sales in October, up slightly from 27% in the prior month.

All-cash sales accounted for 29% of transactions in October. A third of home buyers are paying all cash as mortgage rates stay high, Redfin says.

The big picture: Sales were hurt by elevated mortgage rates, which hit a 20-year high in October, and a continued lack of inventory. Home sales for 2023 could be the lowest in 30 years.

What the NAR said: Improvement could come in a few months, said Lawrence Yun, chief economist at the National Association of Realtors. “Fortunately, mortgage rates have fallen for the third straight week, stirring up buying interest,” he said. “Though limited now, expect housing inventory to improve after this winter and heading into the spring. More inventory will result in more home sales.”

What they are saying: “We expect growth in incomes to drive any near-term improvement in affordability, but it’s plausible that home prices will start to fall sometime next year, as falling mortgage rates lead to a surge in supply, as would-be sellers will be able to move with a less-punitive increase in their mortgage costs than would be required today,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks
DJIA

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were lower in late morning trading on Tuesday while the 10-year Treasury yield
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was down to 4.40% in early morning trading.