Home Sales Post First Annual Gain in More Than 3 Years

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Home Sales Post First Annual Gain in More Than 3 Years

November 19, 2024

A sharp decline in mortgage rates helped pull buyers off the sidelines in October, with the housing market showing signs of relief after a disappointing summer.

Sales of previously owned homes, which account for the bulk of the market, rose 3.4% last month from the month prior to a seasonally adjusted, annualized rate of 3.96 million units, according to the National Association of Realtors (NAR). October's sales were 2.9% higher than during the same month last year, marking the first annual increase the housing market has seen in more than three years.

The month's sales count is based on closed contracts, meaning most of the sales actually occurred between August and September, when mortgage rates were falling. The average rate for a 30-year fixed mortgage was around 6.6% at the start of August and dropped to a low of 6.11% by the middle of September, according to Mortgage News Daily.

Economists with the NAR noted that the worst of the downturn in home sales could be over, citing increasing inventory and continued economic growth as reasons for optimism, despite still-elevated mortgage rates.

There were 1.37 million homes for sale as of the end of October. That's an increase of 19.1% from last October. At the current sales pace, that represents a supply of 4.2 months. Analysts consider a 6-month supply to indicate a balance between buyers and sellers.

Inventory is improving, but remains constrained, putting upward pressure on prices. The median price of a previously owned home sold in October was 407,200, an increase of 4% from the year prior.

First-time and entry-level buyers continue to be priced out, with the market seeing more activity at the higher end of the market. The percentage of first-time buyers fell to 27%, down from 28% a year earlier and far below the historic norm of roughly 40%.

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