"First-time buyers are really struggling in today's market".
Sales of previously occupied homes fell once again in October as steep home prices continued to hurt affordability and keep first-time buyers on the sidelines.
Citing data from the National Association of Realtors (NAR), the Associated Press reported that existing home sales fell to a seasonally adjusted annual rate of 4.43 million last month. This is 5.9% below September and 28.4% down from October of the previous year.
October’s fall in sales marked this year’s ninth consecutive month of decline, the longest on record since 1999. Sales have also dropped to the slowest annual pace since December 2011, excluding the slowdown that occurred around the start of the COVID-19 pandemic in May 2020.
Amid this slowdown, home prices have continued to climb, with the national median rising 6.6% to $379,100 from a year earlier. While this is 8% below the peak recorded last June, it is still 40% above October 2019.
“That’s really hurting affordability,” NAR chief economist Lawrence Yun told the Associated Press. “Most household incomes have not risen by 40%.”
Inventory has likewise shrunk for the third consecutive month, according to the NAR’s data, with 1.22 million homes listed for sale by the end of October. This is 0.8% below September levels and equates to a supply of 3.3 months at current pace.
One reason for the drop in the number of homes listed for sale is rising mortgage rates, the Associated Press said, as homeowners who were able to lock in record-low rates from the last couple of years delay the purchase of a new home.
With listings down, homes sold within an average 21 days, up from 19 days in September. By contrast, homes typically sold after more than 30 days pre-pandemic.
“First-time buyers are really struggling in today’s market,” said Yun, pointing to data which showed that first-time buyers accounted for only 28% of sales in October, falling slightly from the 29% reported in September.
Based on historical standards, first-time buyers typically accounted for as much as 40% of transactions in the market, according to the Associated Press.