Existing home sales rise 1.5% in October, but lag higher mortgage rates

Housing inventory remains constrained, standing at approximately 1.6 million homes, which is below the typical range of 2 to 2.5 million considered normal. This low inventory situation has persisted for several years, contributing to historically low sales figures when adjusted for population and labor force size.

Analysts suggest that the year-over-year decline is not surprising given the strong housing demand and lower mortgage rates observed in the prior year. While the month-to-month growth might be revised, the overall sentiment is that the report does not fully capture the current market reality shaped by higher interest rates. A continued softening of the market is anticipated, though not expected to be drastic.

Despite the challenges, the housing market is described as healthier than during the COVID-19 pandemic, with slowing price growth, wages outpacing home price increases, and a more balanced power dynamic between buyers and sellers. The gradual recovery of inventory levels is seen as a positive sign for the market's long-term stability.