US existing home sales fall to lowest in 16 years, down 8.8 percent in October

Existing home sales in the United States have fallen to their lowest level in 16 years. According to a new report from the National Association of Realtors, existing home sales in October were 3.75 million, a decline of 8.8 percent from a year earlier.

The report said sales were last this low in 2010. The housing market has finally broken out of the stagnant holding pattern it had been stuck in for more than four years, just not in the right direction, the analysis said.

Joel Berner, senior economist at Realtor.com, described the result as a punch in the gut. He said a soft month had been expected, but not the softest month since 2010.

The drop is mainly due to high mortgage rates. In October, the average rate for a 30-year fixed-rate mortgage hit as high as 7.40 percent, the highest since 2023. Rates have come down a bit since then, but are still well above where they were a year ago.

Higher inflation and bond yields have driven up mortgage rates. The analysis said some of this housing slowdown was by design. The Federal Reserve raised its benchmark interest rate in September to increase the cost of borrowing, including home mortgages.

Fewer home sales and other purchases mean less economic activity, which the Fed wants in order to reach its goal of lowering inflation, the report noted. Policymakers at the Fed have signaled another rate hike could come in December, which could further slow the housing market.

Berner said it might seem like kicking the housing market while it is down for the Fed to continue a rate-raising cycle, but in the long run getting inflation under control is really the goal.