Published
- 2 min read
Housing Slump: Existing Home Sales Hit 13-Year Low
Housing Market Stalled: Existing Home Sales Plunge as Inventory Shrinks and Rates Bite
The American housing market faces a stark dilemma: low inventory for buyers and high mortgage rates dampening activity, according to the National Association of Realtors (NAR). Existing home sales slumped 4.1% in October, marking a 14.6% decline year-over-year and the lowest level in 13 years.
Key Findings:
- Sales Down: Annual sales reached 3.79 million, a significant drop from 4.44 million a year ago.
- Prices Up: Despite the sales decline, the median price of a house sold rose 3.4% to $391,800.
- Regional Variations: Three out of four regions saw monthly sales declines, with only the Midwest holding steady. All regions experienced year-over-year declines.
Challenges for Buyers:
- Inventory Squeeze: A persistent lack of houses on the market continues to constrain buyer options.
- Affordability Crisis: Mortgage rates hovering above 7% in October significantly impacted affordability, with rates reaching an alarming 8% mark just weeks earlier.
Silver Lining for Sellers:
- Price Growth: Existing homeowners benefit from rising prices, with the October median marking a new all-time high.
- Housing Wealth Accumulation: The typical homeowner has accumulated over $100,000 in housing wealth over the past three years.
Market Dynamics:
- Sellers Hold Back: Many existing homeowners, locked into historically low mortgage rates, are reluctant to sell.
- Buyers on the Fence: High mortgage rates force potential buyers to choose between holding out for better conditions and potentially worse pricing in the future.
Glimmers of Hope:
- Recent Rate Decline: Mortgage rates have** dropped to 7.5%** as of October, offering some relief.
- Future Rate Forecasts: Housing analysts anticipate rates could dip below 7% in early 2024 as the Federal Reserve pauses its rate hikes.
Conclusion:
The housing market faces a complex balancing act. While existing homeowners enjoy price gains and accumulated wealth, the path for buyers remains challenging due to low inventory and high mortgage rates. A potential decline in rates in the coming year could offer some hope for buyers, but the market’s trajectory remains uncertain.