WASHINGTON — Existing home sales fell sharply in October, dropping to their lowest level in 16 years as elevated mortgage rates continued to discourage buyers.
Sales declined 8.8% from a year earlier to a seasonally adjusted annual rate of 3.75 million, according to National Association of Realtors figures cited by NPR. The reading was the weakest since 2010.
“It was a punch in the gut,” Joel Berner, senior economist at Realtor.com, told NPR. “We expected to see a soft month but not the softest month since 2010.”
Mortgage borrowing costs were a major factor in the slowdown. The average rate on a 30-year fixed-rate mortgage reached as high as 7.40% in October, its highest level since 2023, NPR reported. Rates have eased somewhat since then but remain above year-earlier levels.
Higher inflation and bond yields have contributed to rising mortgage rates, making monthly payments less affordable for prospective buyers and limiting housing market activity.
‘Kicking Market While It’s Down, But…’
The Federal Reserve raised its benchmark interest rate in September as part of its effort to restrain inflation, NPR reported. Although the Fed does not directly set mortgage rates, its policy decisions can influence borrowing costs and demand across the economy.
Fed policymakers have signaled that another rate increase could come in December, potentially adding to the pressure on home sales.
“It might seem like kicking the housing market while it’s down right now for the Fed to continue a rate raising cycle but in the long run getting inflation under control is really the goal,” Berner told NPR.
