Existing-home sales dropped in October for the second straight month, and officials with the National Association of Realtors say that in order to reverse the trend, borrowers need more access to credit and inventory needs to increase.
Total existing home sales fell 3.2% in October from the previous month, according to the NAR. Sales are still up 6% year-over-year, and have remained above year-ago levels for the last 28 months.
Prices continued to rise. The national median price for existing homes was $199,500, up 12.8% from the previous year. October marked the 11th consecutive month of year-over-year price increases.
But high prices and low inventory are hurting sales, according to NAR Chief Economist Lawrence Yun.
“The erosion in buying power is dampening home sales,” Yun said. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains.”
NAR President Steve Brown said looser credit for borrowers could also give the market a welcome jolt.
“Although mortgage interest rates are still historically affordable, some financially qualified buyers are being denied a loan,” he said. “The risk-averse nature of lending also is impacting small builders who are unable to get construction loans, even when they see strong local demand. We simply have to reverse the pendulum swing back toward the middle to give more creditworthy borrowers access to safe and sound financing.”