Existing Home Sales Tick Higher in October, but Falling Supply Adds New Pressure
Existing-home sales showed a modest lift in October as buyers took advantage of a brief window of lower mortgage rates late in the summer, but the improvement may be short-lived. NAR reported that sales rose to a 4.1 million annual pace — a 1.2% month-over-month increase and 1.7% higher than last year — largely reflecting contracts signed in August and September before the government shutdown slowed parts of the lending process. During that period, mortgage rates eased from 6.63% to as low as 6.13%, giving buyers temporary breathing room before drifting back toward the mid-6% range.
However, the boost in activity is already running into inventory constraints. After months of gradual improvement, the supply of homes for sale slipped to 1.52 million, a decline of 0.7% from September. Even with inventory still up nearly 11% year over year, today’s levels remain tight and continue to support steady price gains. October’s median existing-home price climbed to $415,200 — up 2.1% from a year earlier — marking the 28th consecutive month of annual increases. Economists note that even slight rate improvements can help buyers, but affordability remains stretched, keeping overall sales historically low.
Homes are also taking longer to sell, staying on the market for an average of 34 days compared with 29 days a year ago. This slower pace underscores a calmer, more deliberate market where buyers can weigh choices rather than rush into decisions. First-time buyers made up 32% of purchases, a noticeable improvement from last year, though regional differences remain stark: the Northeast still suffers from a severe lack of listings, the West faces extreme price barriers, and the Midwest and South offer the best mix of supply and affordability for entry-level purchases.
High-end homes continue to dominate sales growth. Transactions above $1 million jumped 16% year over year, and homes between $750,000 and $1 million rose 10%. Meanwhile, more budget-friendly segments saw little movement or even declines, highlighting how wealthier buyers are driving much of the current demand while more price-sensitive shoppers remain constrained by elevated borrowing costs.
Overall, October’s uptick shows that buyers respond quickly when rates dip, but the market’s larger structural challenges persist. If mortgage rates drift lower again toward the end of the year, demand could strengthen further — but unless inventory rises instead of shrinking, any recovery in sales is likely to be gradual and uneven heading into 2026.
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