WASHINGTON (Reuters) -U.S. existing home sales increased in October as buyers took advantage of lower mortgage rates, though rising unemployment and high home prices remain a constraint for the housing market.
Home sales rose 1.2% last month to a seasonally adjusted annual rate of 4.10 million units, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales would rise to a rate of 4.08 million units. Home sales advanced 1.7% on a year-over-year basis.
“Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates,” said Lawrence Yun, the NAR’s chief economist.
Mortgage rates decreased when the Federal Reserve resumed its interest rate cuts, data from mortgage finance agency Freddie Mac showed. They have, however, stopped their decline as U.S. central bank officials have signaled a reluctance to lower rates again next month. Labor market stagnation is also sidelining potential homebuyers.
Lack of affordable housing has become a political hot-button issue. President Donald Trump this month suggested a 50-year mortgage to make housing affordable, an idea that was panned by some of his supporters and housing market experts who argued it would result in homeowners paying more in interest and taking longer to build equity. The NAR this month estimated the median age of first-time buyers was 40. The typical homebuyer in the 1980s was in their late 20s, the NAR said.
The inventory of existing homes last month increased 10.9% to 1.52 million units from a year ago. It, however, remains below the levels that prevailed before the COVID-19 pandemic. The median existing home price last month increased 2.1% from a year ago to $415,200. At October’s sales pace, it would take 4.4 months to exhaust the current inventory of existing homes, up from 4.1 months a year ago.
First-time buyers accounted for 32% of sales in October, up from 27% a year ago. Economists and realtors say a 40% share in this category is needed for a robust housing market.
All-cash sales constituted 29% of transactions, up from 27% a year ago. Distressed sales, including foreclosures, made up 2% of transactions, holding steady from a year ago.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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