Existing home sales rise in October
Summary
Existing home sales rose 1.2% to a 4.1 million-unit pace in October, the second straight monthly gain. Although resales remain sluggish relative to historical norms on account of adverse affordability conditions, activity has trended higher in recent months alongside a modest easing in mortgage rates. Increased supply is another support factor, with better availability pulling prospective buyers off the sidelines and keeping home price appreciation moderate.
October's gain in existing sales is consistent with the recent drift higher in mortgage applications for purchase, suggesting home sales will continue to gradually improve from a low level over the next several months. While there is further scope for improvement in the months ahead, we do not anticipate a strong rebound as elevated homeownership costs remain a constraint. What's more, the bulk of mortgaged homeowners still hold sub-5% mortgage rates, well below where mortgage rates currently prevail. Since we do not expect mortgage rates to ease much more over the next few years, the mortgage lock-in effect will likely continue to limit new supply.
Author
Wells Fargo Research Team
Wells Fargo
