US Home Sales Plummet to Lowest Point Since 2010 Amid Soaring Mortgage Rates

Sales of previously owned homes in the United States have reached their lowest level since August 2010, as mortgage rates continue to hover above 7 percent. The National Association of Realtors (NAR) reported on Thursday that home sales experienced a 5.5 percent drop in October, settling at a seasonally adjusted annual rate of 3.75 million units.

NAR Chief Economist Lawrence Yun attributed the decline to the challenging market conditions, stating, “Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023. As a result, home sales fell to their lowest level since August 2010. It is just a tough market for buyers and sellers.”

The NAR report further indicated a year-over-year decrease of 8.8 percent in sales. Sales declined month-over-month in the Midwest, South, and West regions, while remaining steady in the Northeast. All four regions saw a year-over-year decline in sales.

The sales figures used in the report reflect transactions at the closing of a contract for previously occupied homes, with October’s sales likely representing contracts signed in August and September. Despite the reduced number of transactions in October, the report noted that the 88 million homeowners across the country are largely in a stable financial position due to significant housing wealth accumulation.

First-time buyers constituted only 29 percent of home purchases last month, a decrease from 31 percent in September and 32 percent in October of the previous year. Historically, first-time buyers have accounted for approximately 40 percent of home sales.

The U.S. housing market has been experiencing a slump since 2022, following an increase in mortgage rates from their pandemic-era lows. Last year, sales of previously occupied U.S. homes were largely stagnant, remaining at a 30-year low. Yun anticipates that home sales this year will likely conclude at a lower volume than in 2025.

According to Freddie Mac, the average 30-year fixed-rate mortgage stood at 7.33 percent in October, an increase from 6.86 percent in September and 6.25 percent a year prior. However, the rate averaged 7.18 percent last week, down from 7.24 percent the preceding week.

Mortgage rates are influenced by various factors, including inflation, Federal Reserve policy, and bond market investors' economic outlook. They generally follow the trend of the 10-year Treasury yield, which lenders use as a benchmark for pricing home loans. Prior to the past few weeks, mortgage rates had been on an upward trajectory since late February, coinciding with the commencement of the U.S. war with Iran, which led to increased oil prices and higher inflation. The rise in rates also reflected heightened volatility in the bond market, contributing to rising U.S. Treasury yields.