Existing home sales fell to 3.75 million in October, marking an 8.8% decline from a year earlier and reaching their lowest level in 16 years, according to the National Association of Realtors and reporting from NPR, wkms.org, and wfae.org.
The housing market has finally broken out of the stagnant holding pattern it has been stuck in for more than four years, just not in the direction buyers and sellers hoped for. The last time sales dropped this low was in 2010.
“It was a punch in the gut,” said Joel Berner, senior economist at Realtor.com, told NPR. “We expected to see a soft month but not the softest month since 2010.”
The steep drop is driven largely by high mortgage rates. Peaking as high as 7.40%, the average cost for a 30-year fixed-rate mortgage reached its highest point since 2023 during October. While rates have receded slightly since that peak, they remain well above levels seen a year ago.
Higher inflation and climbing bond yields have pushed mortgage rates upward, though some of this housing slowdown is entirely by design. To make borrowing more expensive—including for home mortgages—the Federal Reserve increased its benchmark interest rate back in September.
Policymakers aim to dampen economic activity by reducing home sales and other consumer purchases, working toward their stated goal of lowering inflation. Federal Reserve officials have also indicated that another rate hike could occur in December, which would add more downward pressure on the housing market.
“It might seem like kicking the housing market while it’s down right now for the Fed to continue a rate raising cycle, but in the long run getting inflation under control is really the goal,” Berner told NPR.
