• 3.79 million existing homes were sold in October (SAAR), down 4.1% from September and down 14.6% from October 2022, according to the National Association of Realtors (NAR).
• Total housing inventory at the end of October grew 1.8% to 1.15 million units, NAR said, totaling 3.6 months of supply at the current monthly sales pace. Inventory is still 5.7% lower than a year ago.
• The median existing-home sales price in October was $391,800, 3.4% higher than a year ago.

What happened: Existing home sales fell again in October prolonging a two-year long slump. While housing activity tends to slow this time of year, a sudden and rapid increase in mortgage rates caused supply and demand to fall more than usual this October.

What Zillow Senior Economist Orphe Divounguy thinks: Housing affordability remains the biggest challenge for existing homeowners and potential homebuyers. Mortgage rates have been on a wild rise since September, soaring to the highest level in 23 years. Tighter credit and financial conditions have also cooled the labor market and the three-month moving average of the national unemployment rate increased by a critical threshold last month. The uncertainty and the rapidly changing macroeconomic conditions likely caused many existing homeowners and prospective buyers to wait on the sidelines.

The affordability shock has a larger impact on demand than on supply, explaining why house prices fell slightly more than expected in October. The median price of home sales fell back below $400,000 for two consecutive months now. Despite this price moderation, the median existing home price is still 3.4% higher than it was a year ago.

While affordability remains a limiting factor for many, buyers are hanging tough and the housing market remains supply constrained. The lack of existing homes on the market provides an opportunity for builders to fill the gap. Builders are offering incentives such as rate buy-downs to make the math work for prospective buyers.