T
he existing home sales market saw a glimmer of hope in October, posting its first annual increase since July 2021, rising nearly 3% year-over-year. However, this uptick may be short-lived as mortgage rates have begun to rise again, with the 30-year fixed-rate mortgage averaging 6.84%. Economists are now dialing back sales forecasts for next year, with Fannie Mae significantly scaling back its 2025 home sales forecast from an 11% increase to just 4%.

    The real estate industry is still far from recovery, with existing home sales coming in at a seasonally adjusted annual rate of 3.96 million, shy of the 4 million mark for the fifth straight month. Median existing home prices continue to climb, rising 4% year-over-year to $407,200. The market's sluggishness is attributed to stubbornly high mortgage rates and strong home prices.

    Despite this, there are signs of life in the market. Mortgage loan application volume rose 1.7% this week, driven by a surge in lower-rate FHA loans. Redfin's Homebuyer Demand Index also continues to climb, with demand up 17% from a year ago. Active listings are up 25.9% compared to last year, providing homebuyers with more choices than in recent years.

    However, the market is expected to remain subdued due to elevated mortgage rates and strong home prices. "Any potential thaw in the housing market will likely happen only after the pending winter months," said Molly Boesel, principal economist at CoreLogic. The federal government's downward revision to its existing home sales forecast for 2025 reflects this cautious outlook.