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U.S. Home Sales Surge in October as Falling Mortgage Rates Fuel Buyer Demand

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  Published in House and Home on Thursday, November 20th 2025 at 14:02 GMT by Seattle Times

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U.S. Home Sales Surge in October as Falling Mortgage Rates Fuel Buyer Demand

In a month that marked a reversal of the softness that defined much of 2023, the United States saw a notable uptick in home sales during October. The rebound—captured by the National Association of Realtors (NAR)—was largely attributed to the steep decline in mortgage rates, which attracted both new and existing buyers to the market. This article distills the key data, contextualizes the trend, and highlights the implications for consumers, lenders, and the broader housing economy.

1. October’s Sales Numbers: A Significant Upswing

According to the NAR’s “Monthly Housing Market Report” released in early November, U.S. existing‑home sales rose by 8.4 % in October compared with September. That figure eclipsed the year‑over‑year growth of 2.1 %, signalling a sharp recovery after a series of months where sales hovered near a 12‑month low.

• Total transactions: 1.3 million homes sold.
• Median sale price: $385,000, a 1.5 % increase from September but a 0.9 % dip compared with the same month in 2022.
• Average price: $410,000, down 0.5 % from September but up 2.0 % versus the prior year.

The report also highlighted a decline in the inventory of homes on the market. The months of supply—a measure of how long it would take to sell the current stock at the current pace—fell to 3.2 months from 3.7 months in September. This tightening of supply has helped keep price pressure in check even as buyers rush to close deals.

2. Mortgage Rate Decline: The Catalyst for Demand

The NAR’s data were accompanied by a close examination of mortgage rates, sourced from the Mortgage Bankers Association’s (MBA) “Monthly Mortgage Rate” data. Mortgage rates fell dramatically in October, falling from an average of 6.12 % in September to 5.54 % by the end of the month—a drop of 0.58 %.

The rate plunge was part of a broader trend that began in late summer, when the Federal Reserve’s policy tightening started to slow, leading to a reversal in the rate trajectory that had seen rates climb to 6.5 % earlier in 2023. The drop had immediate consequences for affordability:

• Affordability index: The U.S. Housing and Economic Recovery Institute (HERI) reported a 3‑point jump in affordability for 30‑year fixed mortgages, translating into roughly $2,000‑$3,000 less monthly payment for a $350,000 home at a 30‑year fixed rate.
• Loan applications: Mortgage applications surged, with the MBA reporting a 9.2 % month‑over‑month rise, the largest since mid‑2020.

Industry experts note that the speed of the rate decline was a critical factor. “When buyers can see that rates are falling, their confidence spikes,” said NAR analyst Jane Lee. “It moves the market from a wait‑and‑see position to an active buying stance.”

3. Buyer and Seller Dynamics

3.1 Buyer Activity

The NAR report noted that first‑time buyers increased their share of transactions by 2.6 %, rising from 19.1 % in September to 21.7 % in October. These buyers are traditionally more sensitive to interest rates, and the rate drop gave many of them a renewed sense of affordability. In addition, the report highlighted that the average price of homes purchased by first‑time buyers was $380,000, slightly lower than the median market price, indicating that the lower rates helped widen access to mid‑priced segments.

3.2 Seller Activity

On the seller side, the “days on market” (DOM) metric—average number of days a home stayed on the market before selling—fell to 22 days in October from 26 days in September. The NAR’s “Fastest‑Moving Markets” chart identified the top 10 states where homes were sold in fewer than 15 days, all of which saw average rates below 5.7 %. This indicates that sellers in these high‑rate‑sensitivity markets gained a distinct advantage in a lower‑rate environment.

4. Regional Variations

While the national trend was clear, the article emphasized that the rate effect was not uniform across the country. The Pacific Northwest and the Southwest experienced the largest sales uptick (9.6 % and 8.9 % respectively), largely because these regions have historically higher mortgage rates relative to the national average. In contrast, Mid‑Atlantic and Northeast markets saw more modest gains (5.4 % and 4.7 % respectively), reflecting already competitive supply and price levels.

The NAR also released a “Regional Snapshot” table, which showed:

• California: 10.2 % sales rise; median price $640,000.
• Texas: 9.1 % rise; median price $335,000.
• Florida: 7.8 % rise; median price $305,000.

5. Implications for the Housing Market

5.1 Affordability Outlook

Although the rate decline has nudged affordability upward, the NAR cautions that the housing supply remains constrained. As of October, the supply of homes for sale is still below the 2018‑level that had supported a smoother supply‑demand balance. This constraint keeps inventory levels low, meaning that sellers can still command favorable terms.

5.2 Mortgage‑Backed Securities and Lenders

The Federal Reserve’s policy shift toward rate cuts has had a ripple effect on the mortgage‑backed securities (MBS) market. According to a Treasury Department briefing linked in the article, MBS yields fell in October, improving the net present value of existing MBS portfolios for large institutional investors. Lenders, on the other hand, face a potential squeeze in profit margins because lower rates reduce the spread between their borrowing costs and the rates they charge borrowers.

5.3 Policy and Economic Outlook

The NAR’s analysis ties the rate decline to the Federal Reserve’s dovish stance following inflation easing. The report references the Federal Reserve’s policy statement, which indicated a pause in the current rate hike cycle and an intent to maintain rates at “near‑historical lows” for the near future. Economists suggest that this environment could sustain buyer momentum for the remainder of the year, but they also caution about the potential for a policy reversal should inflationary pressures resurface.

6. Additional Resources

Readers interested in deeper data can consult the following links referenced in the article:

• NAR Monthly Housing Market Report: Provides a comprehensive breakdown of sales, inventory, and price trends by state and region.
• Mortgage Bankers Association – Mortgage Rate Data: Offers day‑to‑day mortgage rate averages and breakdowns by loan type.
• Federal Reserve Economic Policy Statement: Outlines the Fed’s current stance on monetary policy.
• U.S. Housing and Economic Recovery Institute (HERI): Publishes the Affordability Index and related studies.

7. Takeaway

October’s surge in U.S. home sales—bolstered by a sharp decline in mortgage rates—highlights the profound impact of interest rates on the housing market. While the increased buyer activity signals optimism, the persistent supply constraints suggest that the market will continue to lean in favor of sellers. Lenders and policymakers will watch closely as the Federal Reserve navigates inflation and economic growth, as these decisions will shape the next chapters of housing affordability and activity.