US existing home sales hit lowest since 2010 as mortgage rates bite (opens the source in a new tab)
- US sales of previously owned homes fell 5.5% in October from September, the slowest pace since August 2010, the National Association of Realtors said. The annual rate of 3.75mn sales also missed forecasts, the FT reports.
- Higher energy prices from the Iran war have lifted inflation and Bond yield The annual return a bond pays at today's price; rising yields mean borrowing is getting dearer., pushing mortgage rates as high as 7.5% in early October, a three-year high. Unsold homes now take the longest to sell in more than a decade.
- The Fed raised rates in September and traders expect more. Jefferies expects October's rate jump to weigh on sales in November and December.
- 5.5%
- fall in October sales
- 7.5%
- peak mortgage rate, early October
Why it matters Housing is where higher rates hit households first. Frozen sales lock owners into old mortgages, slow moves for new jobs and cut spending on everything a new home brings, and affordability already shaped the midterms.
Watch next The Fed's meeting next month, where traders expect a quarter-point rise. Slower sales are not falling prices, and owners on cheap mortgages can wait. If inflation cools and yields ease, could pent-up demand return fast?