Sales of previously owned homes in the United States picked up in October, industry data showed Thursday, fueling hopes that a slump in the sector may be ending.
Existing home sales rose 3.4 percent last month from September to a seasonally adjusted annual rate of 3.96 million, the National Association of Realtors (NAR) reported.
Compared with a year ago, home sales jumped by 2.9 percent, marking the first year-on-year increase since July 2021.
“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” NAR chief economist Lawrence Yun said in a statement.
He told reporters on a call that people could be accepting a “new normal” in mortgage rates, which stand markedly higher than they were in 2021.
He expects housing demand to continue growing, given that “additional job gains and continued economic growth appear assured.”
The interest-sensitive housing sector has been reeling since the US Federal Reserve rapidly hiked interest rates to stamp out surging inflation in recent years.
Mortgage rates, in turn, increased as well. But levels have eased somewhat since the central bank started cutting the benchmark lending rate in September.
A key reason that home sales stalled in recent times is that homeowners have been reluctant to enter the market and sell their properties, as they had locked in lower mortgage rates previously.
As of October 24, the popular 30-year fixed-rate mortgage averaged 6.5 percent, although this has since inched up in mid-November.
“While mortgage rates remain elevated, they are expected to stabilize,” Yun noted.
The median price of existing homes was $407,200 last month, up 4.0 percent from a year ago, with all major US regions logging price increases.
Yun said this uptick is largely in line with income gains, and expects that additional inventory and more home building will help to bring down the pace of price increases.
Looking ahead, economist Nancy Vanden Houten at Oxford Economics warned that October’s pace might not be sustained.
“Hurricanes Helene and Milton may also weigh on November home sales, which will reflect contracts signed a month or two earlier,” she said.
She cautioned that sales could also be hampered going forward given the risks of a slower pace of Fed interest rate cuts, alongside “inflationary policies” potentially adopted by President-elect Donald Trump’s incoming administration.
