A "For Sale" sign stands at a house in Miami, Florida, U.S. April 16, 2025.
The National Association of Realtors reported on Thursday that sales climbed 1.2 percent from the prior month to a seasonally adjusted annual rate of 4.10 million units. This figure slightly exceeded economist expectations of 4.08 million units, as compiled by Reuters. Compared to the same period last year, sales advanced 1.7 percent.
"Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates," said Lawrence Yun, the NAR's chief economist.
Mortgage rates had eased following the Federal Reserve's resumption of interest rate reductions, according to data from Freddie Mac, a government-sponsored mortgage finance entity. However, rates have since stabilized, with Federal Reserve officials indicating limited scope for further cuts in the near term. Additionally, softening employment trends have deterred some potential purchasers from entering the market.
Affordability remains a key hurdle in the residential sector. The NAR recently estimated that the median age for first-time homebuyers stands at 40 years, a notable increase from the late 20s typical in the 1980s. This shift reflects broader difficulties in accessing entry-level properties amid persistent price pressures.
Inventory levels for existing homes expanded 10.9 percent year-over-year to 1.52 million units in October. Nonetheless, this stock remains lower than pre-pandemic norms. The median sales price for existing homes edged up 2.1 percent from a year earlier, reaching $415,200. At the current absorption rate, it would take 4.4 months to clear the existing supply, compared to 4.1 months in the previous year.
First-time buyers represented 32 percent of October transactions, an improvement from 27 percent a year ago. Industry observers, including economists and real estate professionals, suggest that a 40 percent proportion of first-time purchases is essential for sustained market strength.
All-cash deals accounted for 29 percent of sales, rising from 27 percent in the prior year. Distressed properties, such as foreclosures, comprised 2 percent of the total, unchanged from the year-ago figure.
The uptick in activity underscores the sensitivity of housing demand to financing costs, even as structural factors like inventory constraints continue to temper growth. With mortgage rates holding steady and employment indicators mixed, the sector faces a delicate balance in the coming months. The Federal Reserve's cautious approach to monetary policy will likely influence buyer sentiment, while efforts to address affordability—through varied financing options—could play a role in broadening participation. Overall, October's modest gains offer a positive signal, yet the market's trajectory hinges on resolving supply shortages and supporting wage growth to accommodate higher entry barriers.
