Existing-home sales made their first year-over-year gain since July 2021 this October, but forecasts are mixed given new mortgage rate projections.
Existing-home sales climbed 3.4% in October to a seasonally adjusted annual rate of 3.96 million, according to the latest report from the National Association of Realtors (NAR). Sales advanced 2.9% from one year ago, the first year-over-year increase in more than three years.
Single-family home sales in particular accelerated 3.5% to a seasonally adjusted annual rate of 3.58 million in October, up 4.1% from the prior year.
“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” NAR Chief Economist Lawrence Yun commented. “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”
All four major U.S. regions saw improvements in existing-home sales in October, though year-over-year sales were unchanged in the Northeast.
This coincides with Redfin's existing-home sales report for Oct. 2024, which saw sales rise 1.6% from September, marking the largest gain since January 2022.
The median existing-home sales price ascended 4% from Oct. 2023 to $407,200, representing the 16th consecutive month of year-over-year price gains.
Inventory of unsold existing homes edged higher by 0.7% from September to 1.37 million at the end of October, or the equivalent of 4.2 months’ supply at the current monthly sales pace. Inventory increased 19.1% year over year.
“The ongoing price gains mean increasing wealth for homeowners nationwide,” Yun added. “Additional inventory and more home building activity will help price increases moderate next year.”
Not all housing market analysts are in agreement about the lending environment improving in 2025 and beyond, however. Newly released predictions from Fannie Mae offer an upwardly revised outlook on mortgage rates, coupled with a downward revision to existing home sales for the remainder of 2024 and into 2025.
“Any near-term resurgence in home sales looks unlikely,” the government-sponsored enterprise’s (GSE) Economic & Strategic Research (ESR) Group wrote in its Nov. 2024 report. “Mortgage applications over the last month have fallen back to their recent lows, pointing to lower home sales to close out the year.”
This is due to higher mortgage rates at the end of 2024, which Fannie Mae now predicts will rise to 6.6% (previously 6%), and to 6.3% by the end of 2025 (previously 5.6%).
Fannie Mae economists now anticipate existing home sales to total 4.01 million in 2024, revised down from their previous projection of 4.06 million, to represent a 30-year low.
Their new outlook for existing-home sales in 2025 is 4.18 million, down from 4.52 million.
“For our inaugural 2026 forecast, we project some recovery, with existing home sales rising to 4.89 million — reflecting waning lock-in effects, modest affordability improvements as house price growth decelerates, and growing pent-up demand to move,” economists said.
First-time buyers were responsible for 27% of sales in October, up from 26% in September but down from 28% in Oct. 2023, NAR reported. Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in October, up from 16% in September and 15% in Oct. 2023.
Foreclosures and short sales represented 2% of sales in October, unchanged from last month and the previous year.
