Home Sales Plunge to 16-Year Low as High Mortgage Rates Derail Deals
Existing-home sales suffered a historic setback in October, as surging mortgage rates made shoppers hit the pause button on their homebuying plans.
According to the latest data from the National Association of Realtors® released on Thursday, existing-home sales plunged to a seasonally adjusted annual rate of 3.75 million, down 5.5% from September and 8.8% from a year ago. This marks the lowest market pace since Aug. 2010, during the aftermath of the Great Recession.
“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” says NAR chief economist Lawrence Yun.
Notably, sales fell annually across every price tier in October, even in the $1 million-and-up market that had previously proven resilient.
The median sales price reached $416,700 last month, inching up just 0.4% from a year ago, the highest for the month of October.
Meanwhile, inventory expanded by 1.3% month over month and 4.6% year over year to 1.59 million housing units, a seven-year high. This translates into 5.1 months’ supply, which is the highest level in 11 years.
“Despite fewer transactions in October, the 88 million homeowners across the country are largely in a comfortable financial position due to sizable housing wealth accumulation,” notes Yun.
The average 30-year fixed-rate mortgage in September averaged 7.33% in October, up from 6.86% in September, per Freddie Mac. The rate hit a three-year high of 7.40% on Oct. 8 but has been gradually retreating over the past four weeks.
“Higher mortgage rates certainly discouraged buyers looking for new homes,” says Yun. “So right now, the market’s overall condition is challenging buyers and sellers.”
Across the board decline
Regionally, month-over-month sales declined by the widest margin in the West (-9.7%), followed by South (-6.5%), and Midwest (-3.2%), but held steady in the Northeast. Year-over-year sales slid in all four regions, with the West experiencing the sharpest pullback, at 14.5%.
Realtor.com® chief economist Danielle Hale predicts that home sales are likely to remain relatively low for the rest of 2026 as mortgage rates remain high.
October saw affordability fall across the U.S. The national housing affordability index registered at 100.7, down from 107.3 a year ago. At the same time, all four regions felt the squeeze, with the expensive, undersupplied Northeast shedding 8.7% off its affordability index, followed by Midwest (-7.2%), South (-5.4%), and West (5.2%).
Reflecting the eroding affordability, the share of first-time homebuyers shrunk from 31% in September to 29% in October.
On a positive note, the number of foreclosure sales remains historically low at 2% of all transactions.
“Based on the current underwhelming home sales pace at a time of consistent job growth, there could be sizable pent-up demand if mortgage rates decline,” says Yun.
