US Existing Home Sales Rise on Brief Mortgage Rate Dip, But Affordability Caps Market

A temporary dip in mortgage rates spurred a modest increase in U.S. existing-home sales, but the market’s underlying constraints remain firmly in place.

Sales of previously owned homes climbed 1.2% in October from the prior month, reaching a seasonally adjusted annualized rate of 4.1 million units, according to the National Association of Realtors. This uptick, which also represents a 1.7% year-over-year gain, directly reflects contracts signed during August and September when borrowing costs briefly retreated. The average 30-year fixed mortgage rate fell from 6.63% to a low of 6.13% in that window before climbing back, providing a narrow opportunity for buyers. That window has since closed. The market’s fundamental challenge, however, is supply. Inventory contracted 0.7% from September to 1.52 million available homes, translating to a lean 4.4-month supply at the current sales pace. This scarcity continues to fuel price appreciation. The median home price rose 2.1% annually to $415,200, marking the 28th consecutive month of year-over-year gains and further pressuring affordability. Buyer behavior reflects this fractured landscape. First-time buyers increased their market share to 32% from 27% a year ago, but their success is highly regional, finding better conditions in the more affordable Midwest and South while facing significant supply and price headwinds in the Northeast and West. The market is also clearly segmented by price. Sales of homes valued above $1 million surged over 16% from last year, while transactions for properties under $100,000 fell by nearly 3%. This divergence underscores a market where activity is concentrated at the high end, leaving entry-level buyers with limited options.

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The market’s response to a minor rate fluctuation highlights its extreme sensitivity to financing costs, suggesting that any sustainable recovery is contingent on addressing the more persistent structural issues of low inventory and strained affordability.