U.S. existing home sales rose in October as buyers moved quickly to take advantage of lower mortgage rates. However, rising unemployment and high housing costs continue to weigh on the market.
According to the National Association of Realtors (NAR), existing home sales increased by 1.2% last month to a seasonally adjusted annual rate of 4.10 million units. This result was slightly above the 4.08 million units expected by economists surveyed by Reuters. On a yearly basis, sales were up 1.7%.
NAR chief economist Lawrence Yun said sales improved despite the ongoing government shutdown, noting that lower mortgage rates encouraged more buyers to enter the market.
Mortgage rates fell after the Federal Reserve resumed cutting interest rates, according to Freddie Mac data. However, their decline has recently stalled as Fed officials signal caution about lowering rates again next month. Slowing labor market conditions are also keeping some buyers on the sidelines.
Housing affordability has become a major political issue. President Donald Trump recently floated the idea of a 50-year mortgage to ease affordability pressures. Critics argued the plan would increase total interest costs and delay equity building. The NAR reported that the median age of first-time buyers has climbed to 40, compared with the late 20s in the 1980s.
Housing inventory also expanded in October. The supply of existing homes rose 10.9% from a year earlier to 1.52 million units, though levels remain below those seen before the pandemic. The median price of an existing home increased 2.1% from last year to $415,200. At the current sales pace, it would take 4.4 months to exhaust available inventory, up from 4.1 months a year ago.
First-time buyers represented 32% of transactions last month, an improvement from 27% a year earlier. Industry experts say a 40% share is needed for a fully healthy market.
All-cash purchases accounted for 29% of sales, up from 27% last year. Distressed sales, including foreclosures, held steady at 2% of the market.
