For the first time since July 2021, year-over-year existing-home sales climbed in October, which is a sign of optimism for the housing market. According to the National Association of Realtors (NAR), sales increased 3.4% month over month and 2.9% year over year. What's more, every sales region saw sales climb from September and three regions posted year-over-year growth. According to Lawrence Yun, chief economist for the NAR, "The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions." Housing demand is also increasing due to continuing job gains and economic growth.

Housing Affordability Challenges

Although housing sales are up, buyers are still facing challenges in the form of rising home prices and elevated mortgage rates. October's median existing-home price climbed 4% year over year to $407,200. Not only was October the 16th month in a row of price growth, but every sales region across the country reported price increases. "The ongoing price gains mean increasing wealth for homeowners nationwide," noted Yun. Buyers will benefit in the coming months, meanwhile, as additional inventory and new home construction are expected to increase supply and moderate price growth in the coming year. Further improving affordability, mortgage rates are now starting to stabilize, with the 30-year fixed-rate mortgage averaging 6.77% in mid-November, down from 7.44% a year earlier. Distressed sales, including foreclosures and short sales, accounted for just 2% of all transactions, suggesting that despite affordability challenges, there remains stability and confidence in home values.

Inventory Increasing and Sales Pace Shifting

In more positive news for buyers, total housing inventory climbed to 1.37 million units in October, a slight 0.7% increase from a month ago and an impressive 19.1% increase from a year ago. At the current sales pace, this level of supply would last 4.2 months, down from September's 4.3-month supply but higher than the 3.6-month supply posted in October 2023. Additionally, homes spent more time on the market in October, averaging 29 days before selling in comparison to 23 days a year earlier. The additional time on the market reflects the deliberate pace buyers and sellers are setting as everyone adjusts to current market conditions.

Trends Among Buyers

Mortgage financing is one of the main challenges first-time buyers will face. While rates remain elevated, Yun believes they will stabilize, ensuring first-time buyers will remain represented in the market. This group of buyers accounted for 27% of all home purchases in October, up from 26% a month ago but down from 28% a year ago. Cash investors were responsible for 27% of all purchases, down slightly from 30% a month ago and 29% a year ago. Individual investors and second-home buyers, who account for many all-cash purchases, represented 17% of the market in October, up from 16% in September and 15% in October 2023.

Regional Sales Breakdown

• Northeast: Existing-home sales annual rate of 470,000; an increase of 2.2% from September 2024 but unchanged from October 2023. The median sales price of $472,900 represented a 7.6% increase from October 2023.

• Midwest: Existing-home sales annual rate of 950,000; an increase of 6.7% from September 2024 and 1.1% from October 2023. The median sales price of $305,300 represented a 7.2% increase from October 2023.

• South: Existing-home sales annual rate of 1.77 million; an increase of 2.9% from September 2024 and 2.3% from October 2023. The median sales price of $361,200 represented a 0.9% increase from October 2023.

• West: Existing-home sales annual rate of 770,000; an increase of 1.3% from September 2024 and 8.5% from October 2023. The median sales price of $627,700 represented a 4.4% increase from October 2023.