Due to High Interest Rates... US October Home Sales Lowest in 13 Years

Due to high interest rates and rising home prices, the volume of housing transactions in the United States last month dropped to the lowest level in about 13 years.

[Image source=AP Yonhap News]

According to the National Association of Realtors (NAR) on the 21st (local time), existing home sales in October recorded 3.79 million units, down 4.1% from the previous month. This is the lowest figure since August 2010. Compared to the same month last year, October sales decreased by 14.6%.

The primary reason behind this is the high interest rates. Due to the Federal Reserve's (Fed) rate hikes, mortgage rates have surged sharply, causing housing demand to freeze. Additionally, those who intended to sell their existing homes and buy new ones are withdrawing their listings from the market due to the burden of high interest rates.

Such limited supply is also acting as a factor driving up home prices in most parts of the United States. The median price of existing homes in the U.S. in October was $391,800, up 3.4% compared to the same month last year. The Wall Street Journal (WSJ) reported, citing sources wanting to buy homes, that there is a lack of listings in the market and buyers have to adjust their budgets due to rising interest rates.

The 30-year fixed mortgage rate in the U.S. hit the 8% range last month. Although it has recently shown a downward trend, it remains at a high level. Lawrence Yun, chief economist at NAR, stated, "The high mortgage rates combined with a shortage of homes on the market are hindering home sales."

According to NAR, as of the end of October, the number of homes for sale or under contract was 1.15 million, down 5.7% from the previous year. This is the lowest level for any October since 1999. Daniel Hale, chief economist at Realtor.com, said, "Mortgage rates have been falling since the end of October, but many households may have already finished their home search for this year."

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