Walnut Creek, California — A recent uptick in mortgage rates at the tail end of summer has temporarily spurred home sales, but analysts warn the boost might not last. October witnessed a 1.2% rise in sales of existing homes, totaling 4.1 million units at a seasonally adjusted annual rate, according to the National Association of Realtors. This figure also marks a 1.7% increase compared to the same time last year.

The sales data reflects home closings from contracts signed in late summer, suggesting that the ongoing government shutdown, which began in October, may not have affected these transactions. However, it could complicate closings that involve flood insurance or government-supported rural loans.

During the summer months, the average rate on a 30-year fixed mortgage dipped, providing a window of opportunity for buyers. The rate, which started August at 6.63%, decreased to 6.13% by mid-September before creeping back up to 6.37% by the end of September. Currently, the rate stands at approximately 6.36%.

Real estate inventory has also taken a hit, with the number of homes for sale decreasing to 1.52 million units in October, a decline of 0.7% from the previous month. Despite this reduction, inventory levels remain about 11% higher than a year ago. At the current pace of sales, the market holds only a 4.4-month supply of homes, a figure that continues to be classified as lean.

As demand persists amidst dwindling supply, home prices continue to trend upward. The median selling price for homes reached $415,200 in October, marking a 2.1% increase compared to the same month in 2024. This represents the 28th consecutive month of price increases year-over-year.

Looking forward, first-time homebuyers, who accounted for 32% of sales in October—up from 27% last year—are encountering mixed conditions based on geography. While they experience more favorable conditions in the Midwest with an abundance of affordable options, challenges persist in the Northeast due to limited supply and in the West where prices remain steep.

Danielle Hale, the chief economist at Realtor.com, noted that reduced mortgage rates and a seasonal slowdown could offer advantages to prospective buyers. “However, the ongoing lack of affordability continues to be a significant obstacle, keeping overall home sales at historically low levels,” she stated.

Homes are lingering on the market longer than before, with the average duration rising to 34 days in October, compared to 29 days a year ago.

Sales are notably robust in the high-end segment of the market, with properties priced above $1 million seeing a more than 16% increase in sales compared to last year. In contrast, the lower price bracket has seen only modest gains, with homes listed between $100,000 and $250,000 rising about 1%, and those under $100,000 experiencing nearly a 3% decline in sales.

The current landscape reveals a complex interplay of factors influencing the housing market, suggesting that while there may be temporary relief for some buyers, long-term affordability issues continue to loom large.