Home sales jumped in October, and housing demand is set to pick up from here, NAR says

The National Association of Realtors said home sales jumped last month, and buying activity is likely to rise as the market climbs out of a prolonged slump.

Existing home sales rose 3.4% in October, the group said. Sales rose 2.9% year-over-year for the first annual rise since July 2021 when Americans were still in the midst of a pandemic homebuying boom.

The increase in October was largely fueled by more inventory of existing homes coming to market, giving prospective buyers more opportunities to jump off the sidelines, the group said.

Unsold existing home inventory edged up to 1.37 million at the end of October, or about four months of unsold inventory. That’s a 0.7% increase from the prior month, and a 19% surge from levels recorded last year, per the report.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions. Additional job gains and continued economic growth appear assured, resulting in growing housing demand,” Lawrence Yun, the chief economist of NAR, said in a statement.

Buyers, though, are still challenged by affordability issues. Despite higher inventory levels, existing home prices have continued to rise, with the median existing home price climbing 4% in October to $407,200.

It marks the 16th-straight month of price increases, the group added, attesting to the tightness of available supply on the market.

Mortgage rates also remain elevated. Last week, the 30-year fixed mortgage rate ticked lower but remained elevated at 6.78%, three basis-points higher higher than the 52-week average, according to Freddie Mac.

“For most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize,” Yun added.

Real estate forecasters generally expect the housing market to remain tight in 2025. Zillow said it anticipated home prices rising 2.8% over the next 12 months. Bank of America analysts said in a note over the summer that they anticipate home prices to rise another 5% next year.