SEATTLE — In a sign of growing momentum in the housing market, existing home sales rose 1.6% month over month in October, marking the largest gain since January 2022. According to a new report from Redfin, the technology-powered real estate brokerage, this surge brings the seasonally adjusted annual rate to 4,179,346 units. Notably, this represents a 1.7% year-over-year increase, the first annual growth since November 2021, and positions the market to end 2024 with higher sales than 2023.
The median home sale price also climbed, rising 5.2% year over year to $435,313, the largest annual gain in six months. This uptick reflects heightened activity following a drop in mortgage rates, as buyers sought to capitalize on improved purchasing power.
Market Factors Driving the October Recovery
Interest Rate Relief:
The average interest rate on a 30-year fixed mortgage dipped to 6.08% at the end of September, its lowest level in two years, spurring increased home touring and offer activity. This temporary reprieve followed the Federal Reserve’s decision to lower its benchmark interest rate and signal potential future cuts, encouraging buyer optimism.
Economic and Election Uncertainty:
While October sales benefited from September’s rate environment, pending home sales saw a 1.1% decline compared to the previous month. Contributing factors include a spike in mortgage rates to 6.78%, nearing the year’s peak, and election-related hesitations. Additionally, nearly 53,000 home purchases were canceled in October, reflecting 15.5% of all contracts—a signal of lingering buyer jitters.
Uneven Regional Performance
The housing recovery displayed significant regional variation, with metros like Seattle (+26.9%), Sacramento (+20.1%), and Portland (+18.3%) leading in closed sales. Meanwhile, Fort Lauderdale (-16.3%), Tampa (-15.6%), and Miami (-14.1%) saw the steepest declines.
Price Trends:
Markets such as Milwaukee (+13.6%), Fort Lauderdale (+13.3%), and St. Louis (+12.2%) experienced robust price growth, while Austin (-3.4%) and San Antonio (-1.3%) saw price declines.
Pending Sales:
Demand in tech-heavy markets stood out, with San Jose (+32.1%), San Francisco (+25.3%), and Oakland (+22%) posting the most significant year-over-year gains in pending sales.
Challenges Ahead: The Mortgage Rollercoaster and Stale Listings
Despite October’s positive trends, the housing market remains constrained by affordability challenges. Homes lingered on the market for an average of 41 days, the slowest October pace since 2019, with only 27.7% of homes selling above their asking price. Active listings hit a four-year high, signaling potential oversupply in certain markets.
“Sellers who locked in low mortgage rates during the pandemic are hesitant to list their homes, while buyers are cautious about paying elevated prices,” said Cory Kirkland, a Redfin Premier agent in Columbus, Ohio. “Today’s buyers are armed with more information and are unwilling to overpay for homes that haven’t been upgraded.”
Looking Ahead
Although the rise in mortgage rates could temper near-term demand, early post-election indicators suggest buyer interest may rebound. Redfin reported a 25% increase in service requests over the past weekend compared to the same period last year, signaling renewed activity.
“Demand is recovering as uncertainty subsides,” said Chen Zhao, Redfin Economics Research Lead. “However, the market remains highly sensitive to rate fluctuations and economic policy decisions, which will dictate the pace of recovery moving forward.”
As 2024 approaches its conclusion, all eyes will be on interest rate trends and evolving buyer behavior, both of which will shape the housing market’s trajectory into the new year.
