The improvement in mortgage rates at the end of the summer boosted home sales, but that increase could be short-lived.
According to the National Association of Realtors, condo sales rose 1.2% in October from September to 4.1 million units on a seasonally adjusted, annualized basis. Sales rose 1.7% year-over-year.
This count is based on home closings, so contracts were likely signed in August and September. While contract signings would not be affected by the government shutdown that began in October, closures, particularly those requiring flood insurance or government-backed rural housing loans, could be.
During this signing period, the average interest rate for the 30-year fixed-rate mortgage briefly fell, but then rose again. According to Mortgage News Daily, the popular 30-year interest rate was at 6.63% at the start of August, fell steadily to 6.13% by mid-September, and then rose again to 6.37% by the end of the month. It is now at 6.36%.
The inventory of homes for sale has also declined. After rising for most of this year, supply fell to 1.52 million units, down 0.7% from September, although it is still nearly 11% higher than a year earlier. At the current sales pace, the supply is 4.4 months and is still considered lean.
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And that's why prices are still rising. The median price of a home sold in October was $415,200, a 2.1% increase from October 2024 and the 28th consecutive month of annual increases.
“Looking forward, homebuyers in today’s market will benefit from falling mortgage rates and seasonally weaker competition,” Danielle Hale, chief economist at Realtor.com, said in a news release. “At the same time, the lack of housing affordability continues to pose a challenge to maintaining home sales at historically low levels.”
Homes are staying on the market longer, an average of 34 days last month, compared to 29 days last October.
First-time buyers made a comeback in the market, accounting for 32% of sales, up from 27% last year – but not all regions are the same.
“First-time homebuyers face headwinds in the Northeast due to a lack of supply and in the West due to high home prices,” said Lawrence Yun, chief economist at Realtors. “First-time buyers fared better in the Midwest due to the abundance of affordable homes and in the South due to ample inventory.”
Sales growth continues to be strongest in the upper market segment. Homes priced at more than $1 million saw sales increase by more than 16% compared to last year, and homes priced between $750,000 and $1 million saw sales increase by 10%. Meanwhile, sales of homes priced between $100,000 and $250,000 rose nearly 1%, and homes priced under $100,000 saw sales decline nearly 3%.