U.S. existing-home sales fall 5.5% as high mortgage rates squeeze buyers

The National Association of Realtors (NAR) reported that U.S. existing-home sales fell 5.5% in October to a seasonally adjusted annual rate of 3.75 million. That measure removes typical seasonal swings and expresses the month's sales pace as a full-year figure.^[1][2]

Sales reached their lowest level in more than 16 years; existing-home sales cover resales of previously owned properties, including houses, townhouses and condominiums.^[3][2] Reports attributed the weakness to mortgage rates around 7% and still-elevated home prices, which kept potential buyers on the sidelines.^[4][3]

For a given home price, a higher mortgage rate raises monthly payments and reduces how much a buyer can afford to borrow. The combination of high rates and prices described in the reports is suppressing transactions, leaving brokers with fewer commission opportunities and lenders with fewer home-purchase loans to originate. Fewer moves can also weaken demand for furniture, appliances and move-in improvements.^[3][4]

Whether financing costs ease is central to a recovery. The 10-year Treasury yield, one benchmark influencing long-term mortgage pricing, rose from 4.98% on November 10 to 5.10% on November 12, an increase of 0.12 percentage points. Higher Treasury yields can keep upward pressure on mortgage rates, making affordability harder to improve while home prices remain elevated.^[3]

Impact

What to watch next

• The October Producer Price Index on November 13 will test upstream inflation pressure; a stronger-than-expected reading could further weaken expectations for lower interest rates.
• The MBA 30-year mortgage-rate release on November 18 will show whether borrowing costs have begun to ease from the previous reading of 7.21%.
• October pending home sales, due November 18, will track signed contracts awaiting completion and help show whether future closings are stabilizing.