Real estate for sale sign for Redfin in front of a townhouse, Walnut Creek, California, October 29, 2025.
Smith Collection | Gado | Photo archives | Getty Images
Improving mortgage rates in late summer boosted home sales, but that gain may be short-lived.
Pre-owned home sales in October increased 1.2% from September to 4.1 million units on an annualized and seasonally adjusted basis, according to the National Association of Realtors. Sales increased by 1.7% year-on-year.
This count is based on home closings, so contracts are likely signed in August and September. Although contract signings would not be affected by the government shutdown that began in October, shutdowns, particularly those requiring flood insurance or government-backed rural real estate loans, could be.
During this contract signing period, the average 30-year fixed mortgage rate dropped a bit, then rose again. The popular 30-year rate started August at 6.63%, fell steadily to 6.13% by mid-September, then rose again to 6.37% by the end of the month, according to Mortgage News Daily. It now stands at 6.36%.
The inventory of homes for sale has also declined. After rising for much of this year, supply fell to 1.52 million units, down 0.7% from September, although still nearly 11% higher than a year earlier. At the current sales rate, there is a 4.4 month supply, still considered meager.
And that’s why prices keep winning. The median price of a home sold in October was $415,200, an increase of 2.1% from October 2024 and the 28th consecutive month of annual gains.
“Looking ahead, homebuyers in today’s market are enjoying some benefits from lower mortgage rates and seasonal slowdowns in competition,” Danielle Hale, chief economist at Realtor.com, said in a statement. “At the same time, the lack of affordable housing continues to pose a challenge to keeping home sales at historic lows.”
Homes are staying on the market longer, an average of 34 days last month, compared to 29 days last October.
First-time buyers are returning to the market, representing 32% of sales, compared to 27% a year ago. But not all regions are equal.
“First-time home buyers are facing headwinds in the Northeast due to lack of supply and in the West due to high home prices,” said Lawrence Yun, chief economist at Realtors. “First-time buyers are faring better in the Midwest because of the plentiful supply of affordable homes and in the South because there is ample inventory.”
Sales growth remains strongest at the high end of the market. Homes priced above $1 million saw sales increase more than 16% from a year ago, and those priced between $750,000 and $1 million saw a 10% gain. Meanwhile, sales of homes priced between $100,000 and $250,000 increased about 1%, and homes priced under $100,000 saw a sales decline of almost 3%.