Existing-home sales suffered a historic setback in October, as surging mortgage rates made shoppers hit the pause button on their homebuying plans.
According to the latest data from the National Association of Realtors® released on Thursday, existing-home sales plunged to a seasonally adjusted annual rate of 3.75 million, down 5.5% from September's downwardly revised pace of 3.97 million, and 8.8% from a year ago. This marks the lowest market pace since August 2010, during the aftermath of the Great Recession.
"Homebuying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023," says NAR Chief Economist Lawrence Yun.
Notably, sales fell annually across every price tier in October, even in the $1 million-and-up market that had previously proven resilient.
The median sales price reached $416,700 last month, inching up just 0.4% from a year ago, the highest for the month of October.
Meanwhile, inventory expanded by 1.3% month over month and 4.6% year over year to 1.59 million housing units, a seven-year high. This translates into 5.1 months' supply, which is the highest level in 11 years.
"Despite fewer transactions in October, the 88 million homeowners across the country are largely in a comfortable financial position due to sizable housing wealth accumulation," notes Yun.
The average 30-year fixed-rate mortgage in September averaged 7.33% in October, up from 6.86% in September, according to Freddie Mac. The rate hit a three-year high of 7.40% on Oct. 8 but has been gradually retreating over the past four weeks.
"Higher mortgage rates certainly discouraged buyers looking for new homes," says Yun. "So right now, the market's overall condition is challenging buyers and sellers."
Across the board decline
Regionally, month-over-month sales declined by the widest margin in the West (-9.7%), followed by the South (-6.5%), and the Midwest (-3.2%), but held steady in the Northeast. Year-over-year sales slid in all four regions, with the West experiencing the sharpest pullback, at 14.5%.
Realtor.com® Chief Economist Danielle Hale predicts that home sales are likely to remain relatively low for the rest of 2026 as mortgage rates remain high, yet she does not believe it is the new normal.
"Instead, it reflects a perfect storm of an abrupt shift in the financial environment and large uncertainties in the pre-election period for both policy and the economy just as the housing market usually slows for the season," says Hale. "While they won’t last long-term, these challenges are likely to keep home sales near longtime lows for the next few months."
October saw affordability fall across the U.S. The national housing affordability index registered at 100.7, down from 107.3 a year ago. At the same time, all four regions felt the squeeze, with the expensive, undersupplied Northeast shedding 8.7% off its affordability index, followed by the Midwest (-7.2%), the South (-5.4%), and the West (-5.2%).
Reflecting the eroding affordability, the share of first-time homebuyers shrank from 31% in September to 29% in October. However, cash buying increased from 27% in September to 29% in October thanks to the record equity that homeowners have accumulated.
On a positive note, the number of foreclosure sales remains historically low at 2% of all transactions.
"Based on the current underwhelming home sales pace at a time of consistent job growth, there could be sizable pent-up demand if mortgage rates decline," says Yun.
Looking ahead, Hale says she expects more homebuyers to come off the sidelines as the market moves away from recent mortgage rate highs, but with a major caveat.
"Several factors are likely to put a floor under how low rates can go, including a strong economy and jobs market, persistent inflation, and an expected need for tighter monetary policy in the near term combined with sizable demand for capital from both governments and private companies, largely to finance AI-related investments," she says.
Snejana Farberov is a reporter at Realtor.com covering the U.S. housing market and the latest domestic real estate trends. She has worked as a general assignment journalist in New York City and Long Island for 16 years, writing for New York Post, Daily Mail, and News 12. Snejana earned bachelor's degrees in journalism and Italian from St. John's University, followed by a master’s degree from Columbia University School of Journalism.