Housing Market Gains Momentum in October Despite Higher Mortgage Rates
October brought a notable shift in the housing market, with sales of existing single-family homes and condos climbing 3.4% from September and 2.9% year-over-year—the first annual increase in over three years, according to the National Association of Realtors® (NAR). This increase, combined with rising inventory levels, suggests that homebuyers may be adapting to higher mortgage rates.
Key Highlights
Sales Growth:
Single-family home sales rose 3.5% in October to an annualized rate of 3.6 million, up 4.1% year-over-year.
Condo and cooperative sales grew 2.7% month-over-month but were down 7.3% year-over-year.
Sales increased across all regions:
Midwest: +6.7%
South: +2.9%
Northeast: +2.2%
West: +1.3%
Inventory Expansion:
October inventory increased 19% year-over-year, equating to a 4.2-month supply—up from 3.6 months in October 2023.
Affordability Challenges and the “Lock-In” Effect
High mortgage rates continue to strain affordability, particularly for first-time buyers. The median age of first-time homebuyers has reached a record-high 38, compared to 35 last year. First-time buyers now make up just 24% of sales, the lowest share ever recorded.
The “lock-in effect” also limits inventory growth, as many homeowners with sub-3% mortgages hesitate to sell and transition to higher rates. According to Fannie Mae, this trend will keep the housing supply subdued into 2025, with existing home sales forecasted to grow just 4% annually, down from a previous forecast of 11%.
Mortgage Rates and Market Sentiment
Mortgage rates hovered around 6.8% in October, a rise driven by economic strength and robust hiring. While rates briefly dropped in early November, they remain a barrier for many buyers. However, increasing demand suggests that consumers may be “accepting the new normal,” according to NAR’s Chief Economist, Lawrence Yun.
Price Trends and High-End Activity
Home prices remain elevated, with the median price of existing homes reaching $407,200 in October—a 4% increase from the prior year. This marked the 16th consecutive month of year-over-year price growth. Higher-priced homes are seeing more activity than lower-end properties, reflecting the affordability pressures at entry-level price points.
Economic and Housing Market Outlook
While October’s sales growth is encouraging, the seasonally adjusted annualized sales rate of 3.96 million still signals a slow market. Without a strong finish to the year, 2024 may record the lowest home sales in nearly three decades.
Looking ahead, Yun anticipates that inventory growth and additional homebuilding could help stabilize prices and improve market accessibility. However, Fannie Mae warns that the higher-rate environment and its impact on seller mobility will continue to suppress inventory and sales growth into 2025.
This complex mix of rising demand, affordability constraints, and tight supply underscores the challenges and opportunities in today’s evolving housing market.
Experienced Chief Operating Officer with a 26 + year demonstrated history of working in the banking industry. Skilled in all aspects of the residential mortgage market . Strong business development professional with a Bachelor of Science (BS) focused in Business Administration and Management, from St. Joseph College. A direct endorsement underwriter and a licensed Mortgage Loan Originator.
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