Home Sales Rise in October Despite Government Shutdown as Lower Mortgage Rates Entice Buyers

Sales of existing homes rose in October despite the government shutdown, as lower mortgage rates drew more buyers off the sidelines.

Closings on existing homes rose 1.2% last month from September, to a seasonally adjusted annual rate of 4.1 million, the National Association of Realtors® reported Thursday. October's sales figure was up 1.7% from a year ago.

“Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates,” says NAR Chief Economist Lawrence Yun.

Mortgage rates averaged 6.25% in October, the lowest monthly average in more than a year, according to Freddie Mac.

Home sales prices continued to rise, with the median existing-home price rising 2.1% from one year ago to $415,200. That's a record high for the month of October.

Realtor.com® Chief Economist Danielle Hale says that October sales would likely have been higher if the government shutdown had not disrupted aspects of the housing market. The shutdown began Oct. 1 and ended last week with the passage of a temporary spending bill.

"Realtor.com data showed that in October, shopping activity declined in markets such as Washington, DC, and others that were the most exposed to shutdown impacts because of higher concentrations of federal workers," says Hale.

"Although Fannie and Freddie issued guidance giving lenders work-arounds to help keep many home sales on track during the pause in federal activity, some buyers faced delays getting mortgages and closing home sales," she adds.

On a monthly basis, sales increased in the Midwest and South, remained flat in the Northeast, and fell in the West. Year-over-year sales rose in the Northeast, Midwest, and South, and decreased in the West.

“First-time homebuyers are facing headwinds in the Northeast due to a lack of supply and in the West because of high home prices," says Yun. "First-time buyers fared better in the Midwest because of the plentiful supply of affordable houses and in the South because there is sufficient inventory."

First-time buyers gain ground

Last month, 32% of sales were first-time homebuyers, up from 30% in September and 27% one year ago, suggesting a slight improvement in conditions for younger buyers.

Meanwhile, 29% of transactions were cash sales, down from 30% a month ago and up from 27% in October 2024. Cash sales typically represent both investors and repeat buyers with significant built-up equity to spend on their next home.

Yun says that falling mortgage rates, along with wages that are now rising faster than home prices, have slightly improved affordability conditions, perhaps enough to draw some first-time buyers who were on the bubble into the housing market.

"Housing affordability is modestly, modestly improving because wage growth is now outpacing home price growth," says Yun. "The slight improvement in affordability is having some impact."

Inventory tightened slightly, with 1.52 million units on the market at the end of the month. That was down 0.7% from September but up 10.9% from October 2024.

It represented 4.4 months supply at the current sales pace, down from 4.5 months in September and up from 4.1 months a year ago.

Still, homes are taking longer to sell, with the median time on market rising to 34 days, up from 33 days last month and 29 days a year ago.

As the end of the year approaches, full-year home sales are now on pace to roughly match or slightly improve on last year's figure of 4.06 million, which was the slowest pace since 1995.

"The big question for 2026 is which will win out—lower rates or economic uncertainty?" says BrightMLS Chief Economist Lisa Sturtevant.

"There is optimism that lower mortgage rates and affordability improvements will lead to an increase in homebuying activity," she adds. "But we should probably temper expectations for a big surge in sales and listings. There is still a lot of economic wariness, leading more consumers to pull back on spending and express concerns about the outlook for their personal financial situations.”