Home sales fell nationwide for the ninth straight month in October as high mortgage rates continue to squeeze buyers out of a once red-hot housing market.
Existing home sales in October declined by 5.9 percent from September and by more than 28 percent from a year earlier, according to data released Friday by the National Association of Realtors (NAR).
The Federal Reserve’s fight with inflation, which led to a series of rate hikes, has sent mortgage rates soaring and made monthly payments unaffordable for buyers across the country. And NAR chief economist Lawrence Yun said rising rates in October kept up the pressure.
"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher," Yun said.
"The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years,” Yun added.
Overall, year-over-year prices rose again by 6.6 percent, bringing the median home price to $379,100.
Meanwhile, total housing inventory remained lower than a year ago and from September, which has led homes in various markets to attract multiple offers, according to Yun.
Rising mortgage rates and persistently high prices have pushed many homebuyers — especially first-time buyers — out of the market.
And this trend continued in October, as first-time buyers were responsible for 28% of sales.
Still, homebuyers could experience relief after mortgage rates experienced their largest weekly decline following a report showing softer-than-expected inflation.
The 30-year fixed rate fell by nearly half of a percentage point this week, which could lower monthly mortgage payments for prospective buyers by more than $100.
A new analysis from the real estate company Redfin shows the new weekly rate brought monthly mortgage payments down to $2,430 from $2,542.
And Yun said falling mortgage rates mean home sales could soon reach their lowest point.
"Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle," Yun said.