This comes after existing home sales faced impossible odds in August. Soaring mortgage rates led to a deep chill in the housing market. In October 2023, the median price of an existing home sold reached $422,600. This is up 2% from the same month last year. That would make it the 26th straight month of year-over-year price increases, the latest in a two-year run of ever-increasing home values.
All these months of price hikes, homes are not selling faster but instead sitting longer on the market. In August, the average number of days a property was on the market before selling was 31 days, marking a profound reversal from earlier months. Statewide, the lack of overall home supply continues to point to a very tight market. Right now, there’s just a 4.6-month supply out there for sale, down 1.3% from July.
The demographics of buyers have shifted. First-time buyers accounted for just 28% of all sales, a number that’s at a historical low. At the same time, the share of all-cash buyers rose to 28% of transactions, up from 26% a year earlier. Taken together, this trend is a sign of an increasing inclination towards cash purchases as lending conditions continue to tighten.
An unusual level of resilience was exhibited in sales of high-end properties, as homes priced above $1 million experienced an 8% YoY increase. On the flip side, the market for low-cost homes is extremely constrained. Sales of homes under $100,000 have dropped by more than 10% from last year. Lawrence Yun, the Chief Economist at the National Association of Realtors, commented on these trends:
“Record-high housing wealth and a record-high stock market will help current homeowners trade up and benefit the upper end of the market. However, sales of affordable homes are constrained by the lack of inventory.” – Lawrence Yun
Regionally, the Midwest continued to be the strongest-performing region in August, with lower-cost conditions in the market. Home prices in this region are 22% lower than the national average. This has opened up a compelling opportunity for buyers looking for value.
That shift is happening quickly with the rise of mortgage rates and changing demographics of today’s buyers. Analysts are watching all these factors closely to see how they will shape the market over the next few months.