Existing home sales in the United States fell to a 16-year low in October. High mortgage rates and inflation have made it hard for buyers. Sales of previously owned homes dropped to 3.75 million units, an 8.8% decrease from the same month last year, according to the National Association of Realtors (NAR). The median sales price rose slightly to $416,700, showing ongoing affordability issues.
Key Details
The 30-year fixed mortgage rate, a key factor in home buying, increased to about 7.18%. This is close to its 2023 peak of 7.79%. This rate is a big jump from the average of just above 3% during the pandemic. Lawrence Yun, chief economist at NAR, said, "Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023." Pending home sales also reached a record low in September as the market faced pressures from rising costs and interest rates.
Background
In the UK, a similar trend is happening. The Royal Institution of Chartered Surveyors (RICS) reported a drop in housing sales activity. They forecast the weakest outlook since July 2023. The Bank of England's recent interest rate hike is expected to keep mortgage rates high, which will further affect buyer demand. RICS noted that demand remains low across the UK, with expectations for prices to drop over the next year.
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The drop in home sales is likely to impact the housing sector, especially in the U.S. and UK. High mortgage rates continue to pressure affordability. Investors may see effects on related sectors, including construction and home improvement, as demand weakens.
Watch for upcoming Federal Reserve meetings. Further interest rate decisions could influence housing market trends.
Based on reporting by: theguardian.com, nytimes.com