Sales of previously owned homes in the U.S. fell to the slowest pace since August 2010 as mortgage rates remain high and prices keep rising.
Existing home sales dropped 4.1% in October from September to an adjusted annual rate of 3.79 million, the National Association of Realtors said in a statement Tuesday. From a year earlier, the drop was 15%.
Economists surveyed by Reuters were expecting an annual rate of 3.9 million.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” NAR Chief Economist Lawrence Yun said in a statement.
The average 30-year fixed mortgage rate fell to 7.44% in the week ended Nov. 16, the third consecutive drop, Freddie Mac said Thursday. Before this sequence of drops, the rates rose to nearly 8%, the highest since December 2000.
The NAR report showed that sales decreased in the Northeast, West and South regions on a monthly basis. The Midwest was the only area where sales remained stable from September. On an annual basis, all regions posted a contraction.
Despite fewer sales, home prices increased 3.4% from a year earlier to $391,800 as inventory remains tight. At the end of October, there were 1.15 million units for sale, or 5.7% fewer than one year before.
“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”
Many homeowners who have their mortgages locked into low rates avoid selling at this time. That reduces the number of properties on the market, putting upward pressure on prices.
Mortgage rates are directly affected by Federal Reserve policy. The U.S. central bank maintained the rate in the range of 5.25% to 5.50% on Nov. 1, the highest level in 22 years. The next rate decision is scheduled for Dec. 13.