U.S. existing home sales rose in October, the first annual increase in more than three years, as easing interest rates and more properties on the market boosted homebuyers.
Existing home sales rose 3.4% last month from September to a seasonally adjusted annual rate of 3.96 million units, the National Association of Realtors said Thursday. This is in line with the annual pace set in July.
Sales increased by 2.9% compared to October last year, marking the first year-on-year increase since July 2021. The latest home sales exceeded the pace of 3.93 million units expected by economists, according to FactSet.
Home prices rose for the 16th consecutive month on an annual basis. The national median sales price rose 4% from the previous year to $407,200.
“The worst of the downturn in home sales may be over, as increased inventory has led to more transactions,” said Lawrence Yun, chief economist at NAR.
According to NAR, there were 1.37 million unsold homes as of the end of October, an increase of 0.7% from September last year and a 19% increase from October.
This is 4.2 months' supply at the current sales pace, up from 3.6 months at the end of October last year. Traditionally, a five to six month supply is considered a balanced market between buyers and sellers.
With only two months left in the year, existing home sales are at their lowest annual home sales since 1995, Yun said.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began rising from their pandemic-era lows.
Existing home sales fell to a nearly 30-year low last year as average interest rates on 30-year mortgages rose to a 23-year high of nearly 8%, according to mortgage buyer Freddie Mac.
The average interest rate on a 30-year mortgage fell to a two-year low of 6.08% in September, when many of the purchase contracts for homes officially sold in October were likely signed. But it has mostly been rising since then, hitting 6.78% last week.
