Existing home sales rose 1.6 percent month-over-month in October — the biggest gain since January 2022 — to a seasonally adjusted annual rate of 4,179,346, according to a new report from Redfin.
They climbed 1.7 percent year-over-year — the first annual increase since November 2021 — and are on track to finish the year slightly higher than they finished last year (4,093,102).
Overall home sales, which include sales of both existing and newly-built homes, also posted a notable increase. They rose 1.6 percent month-over-month and 3.4 percent year-over-year to the highest level in over a year and a half on a seasonally adjusted basis.
The median home sale price increased 5.2 percent year-over-year to $435,313 in October — the biggest annual gain in six months.
Home sales jumped in October because mortgage rates had just hit the lowest level in two years, giving buyers more purchasing power, Redfin said. The Federal Reserve had also just made news by cutting its benchmark interest rate and outlining plans for future cuts. Redfin agents say some buyers entered the market because they assumed the Sept. 18 decision would cause mortgage rates to plunge, though by this point, most of the decline had already happened.
The average interest rate on a 30-year-fixed mortgage bottomed out at 6.08 percent during the week ending Sept. 26. Noticing that rates were falling, many Americans started touring homes and making offers in September, which is why pending home sales jumped that month. Many of those pending transactions were finalized in October, fueling last month’s rise in home sales. But the rise in pending sales didn’t last into October, Redfin added.
Pending sales fell 1.1 percent month-over-month on a seasonally adjusted basis in October. That’s largely because mortgage rates shot up in September, erasing much of the newfound purchasing power buyers gained over the summer.
Some homebuyers got cold feet as economic uncertainty and election jitters gripped the country; roughly 53,000 home purchases were canceled in October, equal to 15.5 percent of homes that went under contract last month. That’s the highest percentage in nearly a year.
“Homebuyers came off the sidelines when mortgage rates dropped, but now that rates spiked back up, things have slowed down again,” Stayce Mayfield, a Redfin real estate agent in St. Louis, said in a release. “That’s partly because not all buyers who came off the sidelines actually locked in a rate, so now they’re saying, ‘Well wait, now I’m getting quoted 7 percent when I thought I was going to get 6 percent.’ Sellers are grappling with the same issue; those who locked in low rates during the pandemic and were considering selling and buying a new home are now wondering if they missed the boat.”
The mortgage-rate rollercoaster isn’t expected to end anytime soon. Rates will continue to see-saw as investors try to suss out the impact of a Trump presidency, and they’ll likely stay elevated if President Trump moves forward with higher tariffs and tax cuts, according to Redfin.