A brief dip in mortgage rates boosted closings, yet affordability issues and tight supply continue to hold the market near historic lows.
Improved mortgage rates at the end of summer helped push U.S. existing home sales up 1.2% in October, reaching an annualized pace of 4.1 million, according to the National Association of Realtors (NAR). Sales were also 1.7% higher year over year, marking a rare increase in a persistently sluggish housing market.
Because October closings reflect contracts signed in August and September, the temporary drop in mortgage rates earlier in the fall offered buyers a small window of relief. Rates on the 30-year fixed mortgage dipped from 6.63% in early August to 6.13% by mid-September, before climbing back to 6.36% today, according to Mortgage News Daily.
But analysts warn that the momentum may not last.INVENTORY SHRINKS AGAIN — AND PRICES KEEP RISING
Housing inventory fell to 1.52 million units, down 0.7% from September but still nearly 11% above last year’s levels. At the current pace, the U.S. has a 4.4-month supply — still considered lean, and one reason why home prices continue to climb.
The median price of an existing home sold in October hit $415,200, up 2.1% from October 2024 and marking the 28th straight month of annual price gains.
Homes also spent more time on the market — 34 days on average, compared to 29 days a year ago.
“Falling mortgage rates and slower seasonal competition help buyers,” said Danielle Hale, chief economist at Realtor.com. “But affordability challenges keep sales at historically low levels.
”FIRST-TIME BUYERS RETURN — BUT REGIONAL GAPS REMAIN
First-time buyers accounted for 32% of purchases, a notable rise from 27% last year.
But conditions vary sharply by region:
- Northeast: First-timers struggling due to extremely tight supply
- West: High prices remain the biggest barrier
- Midwest: Better affordability helped newcomers enter the market
- South: Inventory levels improving
“First-time buyers fared better in the Midwest and South,” said Lawrence Yun, NAR chief economist.
HIGH-END MARKET SURGES, LOWER-END LAGS
Sales growth remains strongest at the top:
- Homes above $1 million: +16% year over year
- Homes $750K–$1M: +10%
- Homes $100K–$250K: +1%
- Homes under $100K: –3%
Analysts say the luxury market is benefiting from wealthier buyers who are less sensitive to mortgage-rate fluctuations.
