US home sales slumped in October to slowest pace in more than 16 years as mortgage rates surged

Sales of previously occupied U.S. homes slumped in October to their slowest pace in more than 16 years as mortgage rates climbed sharply, ratcheting up borrowing costs for aspiring homebuyers.

Existing home sales fell 5.5% last month from September to a seasonally adjusted annual rate of 3.75 million units, the National Association of Realtors said Thursday. That’s the slowest annual sales pace since August 2010, when the market was still reeling from the late-2000s U.S. housing crash.

Sales sank 8.8% compared with October last year. The latest sales tally fell short of the 3.8 million pace economists were expecting, according to FactSet.

Home sales have been mostly hovering close to a 4-million annual pace going back to 2023, far short of the historic norm that is closer to 5.2 million. October is the third month in a row that the annual sales pace has remained below 4 million.

The sharp pullback in sales comes as the average rate on a 30-year mortgage climbed above 7% in September and hit its highest level in nearly three years last month.

Despite the latest pullback in sales, home prices continued to march higher nationally last month, albeit at a slower clip. The U.S. median sales price rose 0.4% in October from a year earlier to $416,700, NAR said. Home prices have risen on an annual basis for 40 months in a row.

The U.S. housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low.