The decline in US home sales continued in October, marking the ninth consecutive monthly decline.

As homebuyers struggled with significantly higher mortgage rates, rising home prices, and fewer properties on the market, sales of previously occupied U.S. homes fell for the ninth consecutive month in October, reaching the slowest pre-pandemic sales pace in more than 10 years.
With contributions from ALEX VEIGA, Associated Press Business Writer

As homebuyers struggled with significantly higher mortgage rates, rising home prices, and fewer properties on the market, sales of previously occupied U.S. homes dropped in October for the ninth consecutive month, reaching the slowest pre-pandemic sales pace in more than 10 years.
According to data released by the National Association of Realtors on Friday, the annual rate of sales of previously owned homes dropped 5.9 per cent from September to October, landing at 4.43 million. This year has set a record for the longest period of consecutive monthly sales declines dating back to 1999, according to the NAR.

Compared to the same month a year ago, sales plummeted 28.4 per cent. Sales are now at their slowest annual pace since December 2011, when the housing market was still mired in a deep slump following the foreclosure crisis of the late 2000s, excluding the sharp slowdown that occurred in May 2020 near the start of the pandemic.

Home prices continued to rise last month despite the slowdown, albeit at a slower pace than earlier this year. In October, home prices across the country jumped 6.6% annually to a new high of $379,100.

According to NAR chief economist Lawrence Yun, even though the median home price has dropped by about 8% since its peak in June, it is still 40% higher than it was in October 2019 before the pandemic.

The impact on price points is “huge,” he said. Almost no families have seen a 40% increase in their income.

For the third consecutive month, the number of houses available for sale fell. According to the NAR, the number of homes on the market dropped to 1.22 million by the end of October, down 0.8% from the end of September.

At the current rate of consumption, that is only enough to last 3.3 months. An equilibrium market has a supply that can last between five and six months.

Mortgage rates in the United States have increased by more than 100% in the past year, which has dampened home sales and reduced consumer spending.

Freddie Mac, an organisation that purchases mortgages, reports that the average rate on a 30-year home loan this week was 6.61%. The typical rate was 3.1% a year ago. As of late last month, the average rate had risen above 7%, the highest level since 2002.
That can add hundreds to monthly mortgage payments and deter homeowners who locked in a historically low rate in the past few years from purchasing a new home. It’s one explanation for the shortage of available housing.

The Federal Reserve has repeatedly signalled its intention to keep raising its short-term interest rate in an effort to tame the hottest inflation in decades, making mortgage rates a formidable obstacle for the foreseeable future.

The Federal Reserve raised its key short-term interest rate by 0.75 percentage points, or three times the typical margin, two weeks ago. This institution’s key rate has been set between 3.75 and 4 percent.

In general, mortgage rates follow the yield on the 10-year Treasury note rather than the Federal Reserve’s rate hikes. Various factors, such as anticipated future inflation and international demand for U.S. Treasurys, affect the yield.

Given the limited supply of available homes, it is not uncommon for sellers to field multiple offers, especially for more reasonably priced properties.

The National Association of Realtors reported that the average time it took for a home to sell in October was 21 days, up from 19 days in September. In the days before the pandemic, it was not unusual for a house to remain on the market for longer than 30 days before finally selling.

Many first-time buyers are staying on the sidelines because of rising prices and mortgage rates. According to the NAR, their share of sales dropped to 28% in October from 29% in September. Historically speaking, as much as forty percent of all purchases were made by first-time buyers.

To paraphrase what Yun has said, “first-time buyers are really struggling in today’s market.”

Approximately half of the country, according to Yun’s forecast, will see a decrease in home prices of at least 5% in the coming year. The largest price drops are expected to occur in metropolitan areas where home values have skyrocketed in recent years. He even predicted a 15% price drop in San Francisco for the coming year. However, Yun also predicts home price increases of around 5% in Indianapolis and other markets with persistently robust job growth and modestly increasing real estate values.

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