US Existing Home Sales Hit 16-Year Low

Existing home sales in the United States fell to a seasonally adjusted annual rate of 3.75 million units in October, the lowest level since August 2010. The National Association of Realtors reported an 8.8 percent year-over-year plunge, missing economist forecasts of 3.85 million units. This downturn follows a monthly decline of 5.5 percent, driven by a combination of high mortgage rates and home prices that have risen faster than household incomes.

While the average 30-year fixed-rate mortgage recently dipped to 7.11 percent after four consecutive weekly declines, rates peaked at 7.40 percent in mid-September. Fannie Mae projects these rates will remain around 7.5 percent throughout 2027. Affordability has deteriorated significantly since 1997; a median-priced home now requires 31 percent of a typical household's monthly income, compared to 23 percent in 1997, as home prices grew by 228 percent while incomes rose only 136 percent.

Market gridlock persists as homeowners with low rates from 2022 refuse to sell, though inventory has reached its highest level since 2019. Despite the housing slump, the labor market remains resilient with initial unemployment claims holding at 200,000. However, Federal Reserve Governor Michael Barr warned that the deployment of AI could cause short-term disruptions to the job market. Further pressure on mortgage rates may emerge if the Federal Reserve raises interest rates in December to combat a recent jump in consumer prices.