Home sales hit first milestone in over 3 years as buyers take advantage of lower rates

Sales of previously occupied US homes rose in October, the first annual gain in more than three years, with home shoppers encouraged by easing rates and a pickup in properties on the market.Existing home sales rose 3.4% last month, from September, to a seasonally adjusted annual rate of 3.96 million, the National Association of Realtors said Thursday.That matches the annual pace set in July.Sales rose 2.9% compared with October last year, representing the first year-over-year gain since July 2021.

The latest home sales topped the 3.93 million pace economists were expecting, according to FactSet.Home prices increased on an annual basis for the 16th consecutive month.The national median sales price rose 4% from a year earlier, to $407,200.“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, the NAR’s chief economist.There were 1.37 million unsold homes at the end of October, up 0.7% from September and 19% from October last year, NAR said.That translates to a 4.2-month supply at the current sales pace, up from a 3.6-month pace at the end of October last year.

Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.With just two more months left to go this year, existing home sales are on track for the lowest annual home sales since 1995, Yun said.The US housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows.Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of nearly 8%, according to mortgage buyer Freddie Mac.The average rate on a 30-year mortgage fell to a two-year low of 6.08% in September, when likely many of the purchase contracts on homes that officially sold in October were signed.

But it’s been mostly rising since then, reaching 6.78% last week....