Home Sales Tumble for Record Ninth Straight Month
Aggressive Federal Reserve interest rate hikes amid record high inflation hit housing market hardest
A “sold” sign is seen outside of a recently purchased home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger/File Photo Reuters • November 18, 2022 12:05 pm
WASHINGTON (Reuters) – U.S. existing home sales tumbled for a record ninth straight month in October as the 30-year fixed mortgage rate hit a 20-year high and prices remained elevated, pushing homeownership out of the reach of many Americans.
Despite the broad decline in sales reported by the National Association of Realtors on Friday, housing supply remained tight, with considerably fewer homes coming on the market than in the prior year. The housing market has been the sector hardest hit by aggressive Federal Reserve interest rate hikes that are aimed at quelling high inflation by dampening demand in the economy.
“Higher mortgage rates and still-elevated prices remain key constraints for home sales,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
Existing home sales dropped 5.9% to a seasonally adjusted annual rate of 4.43 million units last month. Outside the plunge during the initial phase of the COVID-19 pandemic in the spring of 2020, this was the lowest level since December 2011.
Economists polled by Reuters had forecast home sales would tumble to a rate of 4.38 million units.
House resales, which account for a big chunk of U.S. home sales, slumped 28.4% on a year-on-year basis in October. That was the largest drop since Feb 2008.
The report followed on the heels of news on Thursday that single-family homebuilding and permits for future construction tumbled to the lowest levels since May 2020. Housing inventory also declined.
The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, according to data from mortgage finance agency Freddie Mac. The rate averaged 6.61% in the latest week. The U.S. central bank’s rate-hiking cycle is the fastest since the 1980s.
U.S. stocks were trading higher. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.
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Existing home sales dropped sharply in all four regions. Sales also declined across all price points on a year-on-year basis. Even as demand weakens, housing supply remains tight, limiting the slowdown in house price inflation.
The median existing house price increased 6.6% from
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