NAR signals worst of downturn may be over as existing-home sales rise

Annual existing-home sales increased for the first time in more than 3 years in October, according to the National Association of Realtors. 'The worst of the downturn in home sales could be over.'

 

Annual existing-home sales increased for the first time in more than three years in October, according to the National Association of Realtors’ latest market report.

Existing-home sales — which include single-family homes, townhomes, condominiums and co-ops — increased 3.4 percent month-over-month and 2.9 percent year-over-year to a seasonally adjusted rate of 3.96 million. The median home price increased 4.0 percent year-over-year to $391,600, with all four regions posting price increases.

NAR Chief Economist Lawrence Yun said October’s performance provides hope the worst of the sales slump is over, as economic growth and stabilizing mortgage rates push homebuyers back into the market.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” Yun said in a statement. “Additional job gains and continued economic growth appear assured, resulting in growing housing demand.”

Home sales increased on an annual basis in the Midwest (+1.1 percent), South (+2.3 percent) and West (+8.5 percent), while sales remained unchanged in the Northeast. Total housing inventory increased 0.7 percent month-over-month and 19.1 percent year-over-year to 1.37 million units, as unsold inventory sits at 4.2 months at the current sales pace.

“However, for most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize,” Yun added. “The ongoing price gains mean increasing wealth for homeowners nationwide. Additional inventory and more home building activity will help price increases moderate next year.”

Realtor.com Chief Economist Danielle Hale said October’s existing-home sales reflect the power of mortgage rates on the housing market. The Federal Reserve has cut the federal funds rate twice over the past two months; however, mortgage rates have remained stubborn in the high six percent range.

“October data show that mortgage rates continue to be an important mediator of home sales activity,” she said in an emailed statement. “The sharp uptick in mortgage rates since September despite the Fed’s rate cuts is likely to weigh on home sales activity early in 2025.”

As rates for conventional loans remain elevated, Hale said homebuyers who qualify for VA loans will have a competitive advantage in the market.

“At a time when housing affordability is lacking for many buyers, home shoppers who are eligible for VA loan benefits may have an edge,” she said. “Realtor.com research shows that buyers who used VA loans made lower down payments, had lower credit scores, and lower mortgage rates than similar buyers who used a conforming loan. These benefits translate into real savings on monthly mortgage costs for eligible buyers who know about them and leverage them.”