Housing market cools: sales drop to 16-year low in October

Sales of previously owned homes totaled 3.75 million in October, marking an 8.8% decrease compared to the same period last year, the National Association of Realtors (NAR) reported. Despite the sales decline, the median existing-home sales price saw a slight increase, reaching $416,700.

Regional variations were observed, with sales decreasing in the Midwest, South, and West, while the Northeast demonstrated relative stability.

After a period of declining mortgage rates in 2024 and 2025, with the 30-year rate falling below 6% in February 2026, inflationary pressures and rising interest rates, exacerbated by the Iran war, have driven rates upwards. The 30-year mortgage rate, a benchmark for home loans, currently stands at approximately 7.18%, nearing its 2023 peak of 7.79%. This contrasts sharply with pandemic-era rates, which were just above 3%.

“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” stated Lawrence Yun, chief economist at the NAR. “As a result, home sales fell to their lowest level since August 2010.”

Prior to the October figures, pending home sales, which represent signed contracts awaiting closing, reached historic lows in September, coinciding with the 30-year mortgage rate exceeding 7% for the first time in nearly two years.

The Federal Reserve’s decision to raise interest rates in September, the first increase since 2023, has directly influenced mortgage rates, which now range from 3.75% to 4%. Another rate hike is anticipated next month in response to unexpectedly high inflation figures reported for October.

Affordability concerns and the rising cost of living significantly impacted the midterm elections, contributing to Democratic control of Congress next year. Census data reveals that median rent increases have outpaced inflation nationwide, and the U.S. homeownership rate has remained stagnant since 2021.

“I don’t think this is a new normal for home sales,” commented Danielle Hale, chief economist at Realtor.com. “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.”, 2023