US home sales fell to 13-year low in October due to the highest mortgage rates in the last two decades and lack of houses drove the buyers from the market. The existing home sales in October were 14.6% lower than the previous year. Moreover, as per the report of the National Association of Realtors, the median house price in October was recorded as the highest than ever.
The home sales fell to 13-year low in October as the existing home in a median price of $391,800 with an increase of 3.4% for the previous October. The home resales have recorded the worst performance if we look back in the calendar from 1992 to till now.
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Home sales fell to 13-year low in October in USA
The October sales are reflected through the contracts signed in the previous two months with average mortgage rate spiked up to the levels that are seen last in the year 2000. According to the National Association of Realtors the sales for previously owned homes were 4.1% lower in October as compared to September , with adjusted annualized rate of 3.79 million units. The sales of home fell in the region of Northeast, West, South but remained unchanged for the Midwest.
As per the NAR’s Chief economist the US home sales fell to 13-year low in October due to the following reason “ Prospective home buyers have experienced another difficult month due to persistent lack of housing inventory and the highest mortgage rates in the generation”. In addition, Home resales which is a major part of U.S housing sales plunged to 14.6% on a year to year basis in October.
Reasons why US home sales fell to 13-year low in October
Though there are not just one factor that contributes to home sales falling to the lowest record in the US. But as there are more expensive homes available so they cannot match the preferences and budget of an Average American. Therefore the home owners have to sit in the market for longer and reduce the price of their home compared to what the owners think their homes are worth . This is one of the crucial reasons for experiencing a slowdown in sales with U.S luxury housing market.
As per the report of Redfin the prices of luxury homes are on rise. The luxury homes are defined as the top 5% homes in their respective metro area based on their value. Also the prices of the luxury homes are increased by 9% in the third quarter that is three times to the growth of the prices of non-luxury homes.
The Redfin senior vice president of real estate operations Jason Aleem Stated that “ Paying cash helped the wealthy home buyers weather the storm of high mortgage rates” . he integral reason for the US home sales fell to 13-year low in October is that the average income earners cannot afford the high mortgage rates. So nearly in the third quarter all the homes that are sold were bought in cash. Also only wealthy buyers are taking the high mortgage rates to refinance later .
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Frequently Asked Questions
How much home prices increase every year in The U.S ?
As per the YOY Growth data that is updated in each quarter from March 1992 to June 2023, the average growth rate recorded is 5.4%.
Are housing prices increasing in the U.S ?
Yes as per the latest data of October 2023 the U.S home price increased by 3.5% in comparison to the last year.
