The real estate market is so hot that buyers are staying away. Existing home sales dropped 5.9% from September to a seasonally adjusted annual rate of 4.43 million in October, according to Redfin Corp RDFN, and were down 28.4% year over year.
That represents the largest year over year drop in existing home sales since 2007.
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” National Association of Realtors Chief Economist Lawrence Yun said in a statement.
The number of first-time homebuyers is also declining. In October, they accounted for just 28% of purchases, which is close to an all-time low.
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Reductions in demand and a shortage of houses continue to be challenging issues for the housing industry. At the end of October, there were 1.22 million housing units available, which was a decrease of 0.8% from both September and one year earlier.
At the current sales rate, unsold inventory has a 3.3-month supply, up from 3.1 months in September and 2.4 months in October 2021.
“The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years,” Yun said.
In October, the median price of an existing home across all housing types was $379,100, an increase of 6.6% from October 2021. In October, properties spent an average of 21 days on the market, up from an average of 18 days in October 2021 and 19 days in September. According to NAR data, around two-thirds of the properties that sold last month were available for less than a month.
“Fourth quarter sales in the U.S. will continue to be sluggish,” said Bright MLS Chief Economist Lisa Sturtevant. “For the year overall, sales are on track to be down 15% or more compared to a year ago, falling below the 5 million mark for the first time in nearly a decade.”
Read also: Guess Which Major US City Most Residents Want To Leave ASAP?
Even though mortgage rates have recently dropped, affordability issues still top people's minds as home values seem to be holding steady despite the drop in rates.
To read about the latest developments in the industry, check out Benzinga's real estate home page.
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