WASHINGTON, Nov 12 (Reuters) - US existing home sales fell to the lowest level in more than 16 years in October as rising mortgage rates and still-elevated house prices pushed potential buyers to the sidelines.
Home sales dropped 5.5% last month to a seasonally adjusted annual rate of 3.75 million units, the National Association of Realtors said on Thursday. That was the lowest level since August 2010, when sales were declining following the end of a homebuyers tax credit. Economists polled by Reuters had forecast home resales falling to a 3.85 million unit rate. Sales plunged 8.8% on a year-over-year basis in October.
Home sales are counted at the closing of a contract. Last month's sales likely reflected contracts signed in August and September. The 30-year fixed mortgage rate jumped above 7% in late August, rising to 7.40% by mid-September, for a total 142 basis points since the US and Israel attacked Iran at the end of February, data from mortgage finance agency Freddie Mac showed.
It averaged 7.18% last week, down from 7.24% in the prior week.
"Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023," said Lawrence Yun, the NAR's chief economist.
Sales dropped in the South, Midwest and West regions. They were unchanged in the Northeast.
Existing housing inventory increased 1.3% to 1.590 million units. Supply rose 4.6% from a year ago. At October's sales pace, it would take 5.1 months to exhaust the current inventory of existing homes, the most since November 2015. That was up from 4.7 months in September and 4.4 months a year ago.
The median existing home price last month advanced 0.4% from a year ago to $421,900, the highest for any October.
First-time buyers accounted for 29% of sales, down from 31%in September and 32% a year ago. A 40% share in this category is needed for a robust housing market.
The median number of days on the market for listed properties increased to 35 from 33 in September and 34 a year earlier. Distressed sales, including foreclosures, were unchanged at 2%. The share of cash transactions rose to 29%
from 27% in September. It was unchanged from a year ago.
Individual investors or second-home buyers accounted for 20%of transactions, unchanged from September, but up from 16% a year ago.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
