US existing-home sales hit 16-year low as rates and affordability weigh on market

US existing-home sales fell 5.5% in October to an annualized 3.75M, the weakest pace in 16 years. The West hit its slowest pace in records back to 1999, while the South and Midwest hit lows not seen in more than a decade. Existing condo sales also slid to a record low.

This follows the record-low pending home sales index of 66.0 reported in September. Pending contracts lead closings, so October’s drop was no surprise. Read more (Oct 21, 2026)

Buyers are priced out, not absent

Mortgage rates above 7% explain most of the weakness. Bloomberg reports the 30-year rate fell for a fourth straight week to 7.11%, after an almost three-year high in early October. That is still a hard barrier. On the October median price of $416,700 with 20% down, principal and interest is estimated at roughly $2,240 a month at 7.11%.

Nationwide’s Ben Ayers said this is "probably the worst of it" but expects little near-term improvement. "People are saying 2026 is just not the year to buy a home."

Supply is building

Insights

• Price relief is forming. Rising inventory, weaker new listings and record price cuts all point to softer prices, which could eventually help affordability.
• The lock-in effect still bites. Weak new listings suggest owners with cheap mortgages are staying put, as covered earlier in this conversation.
• Pent-up demand exists. NAR’s Lawrence Yun said sales are underwhelming "at a time of consistent job growth," so demand could return if rates fall. Initial jobless claims rose to 200,000 but stayed near historic lows.

Rates are moving the wrong way today

The relief in mortgage rates may be short-lived. As of 3:34 PM EST on Nov 12, the U.S. 10Y (US10YT) yield is 5.108% (+2.04%), up from a pre-market 4.992%. The U.S. 2Y (US2YT) yield is 4.869% (+3.00%) as of 3:28 PM EST. Mortgage rates track the 10-year, so another leg higher would undo some of the recent relief.

Inflation pressure is also building. Brent Oil (LCO) is at $96.14 (+3.64%). Markets see a December Fed hike as nearly certain, and Bloomberg Economics’ Eliza Winger said rates "will need to fall further — and stay there" to durably revive housing.

Market reaction

Homebuilders are lagging the broader market as yields rise. Weak resale volume can push buyers toward new builds, but rates hit builders too. The PHLX Semiconductor (SOX) index is down 1.20% at 10,437.4, and NVIDIA’s slide is adding to the risk-off tone.

Politics and policy

Housing affordability helped sweep Democrats to power in the midterms, per Bloomberg. NAR’s affordability index dropped to its lowest since mid-2025. The administration’s Oct 22 executive order targets mortgage insurance and refinancing costs, though its effect is not yet visible in the data. (Oct 22, 2026)

Bulls, bears and levels

• Bull case: mortgage rates have eased for four weeks, inventory is rising, and price cuts are building. Mortgage applications have picked up, per Bloomberg Economics, so demand could respond quickly.
• Bear case: the 10-year is back above 5.1%, inflation is hot, and a Fed hike is coming Dec. 8–9. Sales may be bottoming, but a rate rebound could stretch the trough.
• Levels to watch: U.S. 10Y (US10YT) rising above 5.365%, its 52-week high would pressure mortgage rates. SPDR S&P Homebuilders (XHB) falling below $91.87, its 52-week low would signal builders repricing for a longer freeze.

Sales volume says housing is frozen, but rising inventory and price cuts say the thaw has started on the supply side. Rates will decide whether demand shows up to meet it.