Housing market drops to 16-year low
Existing home sales fell to an annual rate of 3.75 million units in October, marking an 8.8% decline from the previous year according to the National Association of Realtors.
That pace matches the lowest level of housing activity recorded since August 2010 during the aftermath of the Great Recession.
The downturn crossed multiple regions, with existing-home sales dropping in the Midwest, South, and West while holding steady only in the Northeast according to Kitco News. Sales of single-family homes fell to an annual rate of 3.41 million, while condo and co-op sales dropped to a record low of 340,000 units according to Wolf Street.
“It was a punch in the gut,” said Joel Berner, senior economist at Realtor.com, as reported by NPR. “We expected to see a soft month but not the softest month since 2010.”
Record mortgage rates stall buyers
The slump stems primarily from expensive home loans driven by rising inflation and higher bond yields according to NPR. The average rate for a 30-year fixed mortgage climbed as high as 7.40% in October according to NPR, representing the highest level since 2023 according to NPR and hovering near levels not seen since 2000 according to The Guardian.
Those borrowing costs contrast sharply with pandemic-era averages that sat just above 3% according to The Guardian. Rates had declined enough in early 2026 to push the 30-year average below 6% in February according to The Guardian, but renewed inflation and interest rate adjustments pushed borrowing expenses back up.
“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” said Lawrence Yun, chief economist at the National Association of Realtors.
Federal Reserve policy impacts
The slowdown in residential real estate aligns with monetary policy goals set by the US Federal Reserve. Central bank policymakers raised benchmark interest rates in September to increase borrowing expenses and cool economic activity in order to lower inflation according to NPR.
Pending home sales reached historical lows in September when the 30-year mortgage rate topped 7% for the first time in nearly two years according to The Guardian. Federal Reserve officials said another rate hike could occur in December to combat persistent inflation according to NPR.
“It might seem like kicking the housing market while it’s down right now for the Fed to continue a rate raising cycle, but in the long run getting inflation under control is really the goal,” Berner told NPR.
Median home prices rise while supply climbs
While transaction volume dropped sharply, inventory levels and prices moved in divergent directions across metropolitan areas. The median existing-home sales price rose slightly to $416,700 according to The Guardian, driven by sustained increases in major cities like Chicago, Toledo, Rochester, and New York City according to Wolf Street.
Single-family home prices dropped in several western and southern markets, including Austin down 26%, Oakland down 23%, New Orleans down 20%, and Lee County down 18% according to Wolf Street. Total housing supply climbed concurrently, with single-family inventory reaching 4.9 months—the highest for any October since 2014 according to Wolf Street—while condo supply expanded to 7.0 months according to Wolf Street.
Despite the transaction freeze, broader homeowner finances remain stable according to Kitco News. Distressed property sales accounted for only 2% of all transactions in October according to Kitco News.
“Despite fewer transactions in October, the 88 million homeowners across the country are largely in a comfortable financial position due to sizable housing wealth accumulation,” Yun told Kitco News.
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