Prices still at record levels even as existing-home sales tick up

The housing market suffered from sluggish sales again in October 2024, but sales volumes finally are looking up. And home prices remain near record highs, a new report by the National Association of Realtors (NAR) shows.

The median home-sale price marked the highest median on record for the month of October, NAR Chief Economist Lawrence Yun said, and was only slightly off from June’s all-time high. Meanwhile, sales of existing homes rose 2.9 percent from a year ago, the first annual rise in home sales since the depths of the pandemic.

“Maybe we are turning the corner,” Yun told reporters Nov. 21. “It was the first year-over-year gain in home sales in more than three years.”

High mortgage rates had contributed to the slow sales figures, but that picture has been shifting. Even before the Federal Reserve announced a half-point rate cut on Sept. 18, mortgage rates had gone all the way from 8.01 percent in October 2023 to 6.20 percent as of Sept. 18, according to Bankrate’s most recent survey of large lenders. However, mortgage rates rose after the Fed meeting, climbing to 7.02 percent as of Nov. 20.

With home prices historically high, affordability challenges remain daunting for homebuyers. Lower mortgage rates would relieve some of that pain — but they also could lure more buyers into the market, and therefore cause upward pressure on prices.

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”

The sharp rise in mortgage rates since the pandemic has kept many homeowners from selling. However, Yun expects that “lock-in effect” to fade with the passage of time and an eventual decline in rates.

Existing-home sales rise but remain slow

The count of existing-home sales includes all completed resales, including single-family houses, condos, townhouses and co-ops. According to NAR, the number of sales nationally increased from the previous month to an annual pace of 3.96 million transactions in October.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” Yun said in a statement.

Regionally, October sales in the Northeast grew 2.2 percent from September to an annual rate of 470,000, identical to last year. In the Midwest, sales rose 6.7 percent to an annual rate of 950,000, up 1.1 percent year-over-year. Sales in the South increased 2.9 percent month-over-month to an annual rate of 1.77 million, up 2.3 percent from the prior year. An the West saw a monthly increase of 1.3 percent to an annual rate of 770,000, up 8.5 percent from a year ago.

Days on market

Properties typically remained on the market for 29 days in October, up slightly from 28 days in September and 23 days in October of last year. Selling times are a crucial measure at any time of year, but especially during the peak spring and summer selling seasons.

Home prices hit new October record

The nationwide median sale price for existing homes in October clocked in at $407,200. That’s below June’s all-time high of $426,900, mostly due to seasonality, but it’s still an increase of 4.0 percent from last year and the highest October median on record. This month’s jump marks 16 consecutive months of year-over-year price increases. It also bucks the typical seasonality trend: Historically, prices decrease as it gets closer to winter, but October’s price was actually few thousand dollars higher than September’s.

“Moderating home price increases are welcome news for homebuyers,” Yun said in a statement. “With wage growth now outpacing home price appreciation, housing affordability will improve.” He offered this illustration of the affordability squeeze: Compared to August 2019, before the onset of the pandemic, U.S. home prices are up 49 percent, while wages climbed just 25 percent during that time.

Home prices were up in all four regions measured. October’s median price in the Northeast was $472,900, up 7.6 percent from October 2023. The Midwest’s median was $305,300, up 7.2 percent from October 2023. In the South, the median price edged up to $361,200, up 0.9 percent year-over-year, and the West continues to have the highest median price by far at $627,700, up 4.4 percent from last year.

First-time homebuyers made up just 27 percent of sales in October, slightly up from the all-time low of 26 percent in August and September. Cash sales accounted for 27 percent of transactions in October, down from 30 percent in September and 29 percent in October 2023.

Housing inventory on the rise

The supply of homes for sale has been inching higher after hitting record lows during the pandemic. Total housing inventory — the overall number of homes for sale on the market — at the end of October was 1.37 million units, up 0.7 percent from September and a significant 19.1 percent from one year ago. That accounts for a 4.2-month supply of unsold inventory at the current sales pace, down a bit from 4.3 months in September but up from 3.6 months in October 2023. The supply is near, but not quite at, the five-to-six months commonly considered a healthy, balanced market.

“Additional inventory and more homebuilding activity will help price increases moderate next year,” Yun said.