U.S. Existing Home Sales (October 2023)
Admir Kolaj, Economist | 416-944-6318
Date Published: November 21, 2023
Existing Home Sales Fall to a new Post-GFC Low in October
- Existing home sales fell 4.1% month-on-month (m/m) to 3.79 million units (annualized) in October, coming in below market expectations for a milder 1.5% decline. October's sales level marks the weakest showing since mid-2010.
- Single-family home sales fell by 4.2% to 3.38 million units in October. Meanwhile, sales in the smaller condo/co-op segment fell by 2.4% to 410 thousand units.
- Activity fell across most Census regions, with sales down 7.1% in the South, 4.0% in the Northeast, and 1.4% in the West. The Midwest was the only outlier, with sales in the region unchanged from the month prior.
- Housing inventories were up 1.8% m/m in October to 1.15 million units (unadjusted), but were still down 5.7% from a year ago. Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.5 months' supply – up from 3.3 months in September and 3.2 months in October of last year. Properties typically remained on the market for 23 days in October, up from 21 days in September 2023 and October 2022.
- House prices were up 3.4% from a year ago, an increase from 2.4% (y/y) in the month prior. Price growth also accelerated moderately on a seasonally-adjusted month-to-month basis, reversing the slowdown exhibited in September (seasonal adjustment performed by TD Economics).
- Mortgage rates rose quickly over the summer and autumn months, with the 30-year rate briefly topping 8% in the second half of October. Given the negative impact that this has on housing affordability, it is no wonder that existing home sales continued to fall last month, setting yet another post-Great Financial Crisis (GFC) low. A lean inventory backdrop is not helping either, with a little over 1.1 million homes for sale making for very slim pickings for prospective homebuyers.
- November has ushered in lower interest rates, alongside a strengthened belief among investors that the Fed is likely done hiking rates. The average 30-year mortgage rate is hovering around 7.4% – some 60 basis points lower than a month ago. This should help unlock some more transactions ahead, with the potential for fruit to bear at the turn of the year as deals close in 1-2 months from now. Note, however, that while the recent decline in rates does indeed provide some relief, mortgage rates still well north of 7% are not exactly consistent with an "affordable" homebuying environment given where home prices stand today. In this vein, a major turnaround in housing is likely to remain elusive for the time being.
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