WASHINGTON — US existing home sales dropped to a 14-year low in September, weighed down by higher mortgage rates and house prices.

The second straight monthly decline in home resales reinforced economists’ views that the slump in residential investment, which includes homebuilding, deepened in the third quarter. The housing market has struggled to rebound after being knocked down by a resurgence in mortgage rates in the spring.

Though supply has improved, entry-level homes remain scarce in most regions of the country, keeping home prices at levels that are unaffordable for most first-time buyers.

“It will take more rate cuts and more options to bring buyers back,” said Jennifer Lee, a senior economist at BMO Capital Markets.

Home sales fell 1% last month to a seasonally adjusted annual rate of 3.84 million units, the lowest level since October 2010, the National Association of Realtors (NAR) said on Wednesday. Economists polled by Reuters had forecast home resales would be unchanged at a rate of 3.86 million units.

Sales likely reflected contracts signed a month or two ago, when mortgage rates were quite high. Mortgage rates initially dropped after the Federal Reserve began cutting interest rates last month, but they have risen over the past three weeks as solid economic data, including retail sales and annual revisions to national accounts, forced traders to abandon expectations for another 50-basis-point rate cut next month.

The rate on the popular 30-year fixed mortgage averaged 6.44% last week compared to 6.08% at the end of September, data from mortgage finance agency Freddie Mac showed.

“We expect housing market activity to remain subdued well into 2025,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

Tombs noted that the average interest rate on existing mortgages was about 4% compared to the current 6.5% rate for new mortgages.

“As a result, interest payments for most existing homeowners will jump if they move home, creating a huge incentive to stay put,” he said. “Only large Fed policy easing will meaningfully change this calculus.”

Home resales, which account for a large portion of US housing sales, decreased 3.5% on a year-on-year basis in September. Sales fell 1.7% in the South, with some of the decline attributed to weakness in Florida following the devastation caused by Hurricane Helene.

Sales in the state could remain depressed after it was slammed by Hurricane Milton weeks later.

The Northeast and Midwest also experienced a decrease in sales, but activity increased in the West.

The Fed’s “Beige Book” report on Wednesday described housing market activity as generally holding up in early October. It also added that “uncertainty about the path of mortgage rates kept some buyers on the sidelines, and the lack of affordable housing remained a persistent problem in many communities.”

Signs of potential homebuyers hugging the sidelines in anticipation of even lower borrowing costs were evident in government data last week showing a marginal increase in single-family building permits in September.

Stocks on Wall Street traded lower. The dollar rose against a basket of currencies. US Treasury prices fell, with the yield on the benchmark 10-year note hitting a three-month high.

SUPPLY IMPROVES FURTHER
The NAR speculated that the upcoming Nov. 5 US presidential election could be making prospective homeowners hesitant to commit themselves. There is, however, no hard evidence that the election is influencing buying decisions.

Residential investment subtracted from gross domestic product in the second quarter. Growth estimates for the third quarter are as high as a 3.4% rate. The economy grew at a 3% pace in the April-June quarter.

Housing inventory increased 1.5% to 1.39 million units last month, the highest since October 2020. Supply surged 23.0% from one year ago. Nonetheless, supply is below the 1.8 million units seen before the COVID-19 pandemic.

Despite the improving inventory, the median existing home price increased 3.0% from a year earlier to $404,500 in September, the highest for any September.

Home prices rose in all four regions. About 20% of the homes were sold above their listing price.

Most of the homes sold last month were in the $250,000-$500,000 price range. At September’s sales pace, it would take 4.3 months to exhaust the current inventory of existing homes, the highest since May 2020 and up from 3.4 months a year ago.

A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Properties typically stayed on the market for 28 days in September compared to 21 days a year ago. First-time buyers accounted for 26% of sales versus 27% a year ago.

That share remains below the 40% that economists and realtors say is needed for a robust housing market.

All-cash sales made up 30% of transactions, up from 29% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from last year.

“Increases in inventory will temper future gains in home prices,” said Nancy Vanden Houten, lead US economist at Oxford Economics. “However, any downside to prices will be offset by increases in demand fueled by lower interest rates.” — Reuters

TOKYO — Japan’s former top currency diplomat Masato Kanda is poised to become the next head of the Asian Development Bank, which said on Thursday there were no other candidates.

The organization has closed its nomination period for its next president, the ADB said in a statement. Its board of governors will begin voting on Monday and the result will be announced on Nov. 28.

Since the ADB was founded in 1966, its top post has always been filled by someone from Japan which, along with the United States, is the bank’s biggest shareholder. Kanda will succeed Masatsugu Asakawa, who announced last month his intention to retire from the position effective Feb. 23, 2025.

Kanda, who stepped down in July after three years as vice finance minister for international affairs, led massive bouts of yen-buying intervention in the currency markets in 2022 and 2024. — Reuters

VIPPEROD, Denmark — European scientists have developed an artificial intelligence (AI) algorithm capable of interpreting pig sounds, aiming to create a tool that can help farmers improve animal welfare.

The algorithm could potentially alert farmers to negative emotions in pigs, thereby improving their well-being, according to Elodie Mandel-Briefer, a behavioural biologist at University of Copenhagen who is co-leading the study.

The scientists, from universities in Denmark, Germany, Switzerland, France, Norway and the Czech Republic, used thousands of recorded pig sounds in different scenarios, including play, isolation and competition for food, to find that grunts, oinks, and squeals reveal positive or negative emotions.

While many farmers already have a good understanding of the well-being of their animals by watching them in the pig pen, existing tools mostly measure their physical condition, said Mandel-Briefer.

“Emotions of animals are central to their welfare, but we don’t measure it much on farms,” she said.

The algorithm demonstrated that pigs kept in outdoor, free-range or organic farms with the ability to roam and dig in the dirt produced fewer stress calls than conventionally raised pigs. The researchers believe that this method, once fully developed, could also be used to label farms, helping consumers make informed choices.

“Once we have the tool working, farmers can have an app on their phone that can translate what their pigs are saying in terms of emotions,” Mandel-Briefer said.

Short grunts typically indicate positive emotions, while long grunts often signal discomfort, such as when pigs push each other by the trough. High-frequency sounds like screams or squeals usually mean the pigs are stressed, for instance, when they are in pain, fight, or are separated from each other.

The scientists used these findings to create an algorithm that employs AI.

“Artificial intelligence really helps us to both process the huge amount of sounds that we get, but also to classify them automatically,” Mandel-Briefer said. — Reuters